Italy plans to strengthen Unicredit with bad debt plan

Italy is working on a plan to take around € 14 billion in doubtful loans from UniCredit to make the takeover of state-owned Monte dei Paschi more attractive to the country’s second-largest bank, sources told Reuters.

Rome-backed advertising loan manager AMCO, which is led by former UniCredit executive Marina Natale, seeks to recover around 60% of UniCredit’s problematic debt while ridding Monte dei Paschi of some high-risk loans , two sources said on condition of anonymity. .

The plan is part of the measures prepared by the Treasury to continue the sale of MPS, whose fate has become the symbol of the long-standing banking crisis in Italy.

UniCredit shares extended earnings to news, rising to 7.4% before closing more than 6% higher, their biggest one-day rise in almost a month.

The Italian Treasury, AMCO and UniCredit declined to comment.

The Treasury aims to have a series of solutions by the end of January, despite divisions within the ruling coalition that risk toppling the government.

In an effort to meet reprivatization commitments agreed with Brussels, the Treasury is working with advisers to tackle the complexities of a deal, including providing a possible state guarantee to protect any future MPS owner from around 10 billion euros in legal claims that the bank faces after decades of mismanagement.

“It will not be possible to resolve all the outstanding issues by the end of January, but there will be significant progress in identifying solutions that will ultimately lead to an agreement,” said one of the sources.

MPS recently added Credit Suisse to its list of advisers, which already included Mediobanca, while UBS joined JPMorgan to represent UniCredit, the sources said.

Bank of America and Orrick act as financial and legal advisers on behalf of the Italian Treasury.

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