The Italian NPL market

What’s next…?!
June 2018
www.pwc.com/it/npl
Foreword & Content
The Italian market for Non Performing Exposures (“NPE”) over The transactions included either the captive units of some
the year 2017 and the first months of 2018 met expectations in Italian banks (e.g. the platform of MPS, Carige and Intesa
terms of vitality and fervor. With regard to Bad Loans, volumes Sanpaolo acquired respectively by Cerved/Quaestio, Credito
lie at €165 billion (GBV) and €64 billion (NBV) as at December Fondiario and Intrum) and some independent players (e.g.
2017. Their massive reduction, occurred from December 2016 CAF, Phoenix Asset Management, Parr Credit, FBS acquired
to December 2017 (less 18% in terms of GBV and less 26% in respectively by Intrum, Anacap/Pimco, Arrow and Banca IFIS).
terms of NBV), has been driven mainly by a few mega deals We believe that new players could enter the market in 2018
of loans derecognition (€17.7 billion disposed by Unicredit for further platform disposals, mainly driven by the future
through Project Fino, €16.8 billion disposed by Banca Popolare opportunities of the servicing market such as i) the forecasted
di Vicenza and Veneto Banca through their bailout). Eventually rise in the volumes of Bad Loans outsourced by the Italian banks
the NPL disposals in 2017 reached a volume of €64 billion. to external servicers, ii) the management of the Unlikely to Pay
exposures which actually represent the next frontier of NPE
The reduction trend even continued over the first quarter of servicing.
2018 featuring further mega deals such as the disposal of €24
billion of Bad loans sold by MPS through securitisation and the In the context of consolidation, a leading role could be held by
disposal of €10.8 billion of Bad Loans sold by Intesa Sanpaolo in the “challenger banks”. These players, leveraging their banking
the context of the sale of their NPL platform to Intrum. license, their in-house workout management expertise and
restructuring capabilities, could offer a wide range of services
Alongside the circa €37 billion of transactions already closed in the market either in the consolidated field on Bad Loans’
in 2018 from 1st January, we foresee a pipeline for further collection and in pioneering the field of Unlikely to Pay loans’
NPE transactions to be announced in the year equal to circa management. We believe that the challenger banks could
€28 billion, including several securitisation operations under represent the evolution of the traditional banking business
GACS (supported by the Italian Government guarantee on the model. Through i) new lending to UtP, sub-performing and
senior notes) and the disposals of some Unlikey to Pay (“UtP”) subprime borrowers, ii) specialty finance and iii) expertise in
portfolios. These announced transactions will even fuel the NPL restructuring measures, the challenger banks could massively
secondary market. UtP exposures reached €94 billion of GBV as affect the dynamics of these portions of NPE portfolios that at
at December 2017 (vs. €117 billion one year before) definitively least up until now did not result in significant positive outcome
surpassing the level of Bad Loans in terms of NBV (€66 billion vs within the Italian banking system.
€64 billion respectively). Italian banks are still pondering over
how to best structure the management of their UtP (internally The maneuvers we see in the market even reflect the requests
by their specialised departments or externally by specialised of the Regulators addressed to the Italian banks. These
servicers), and effectively implement disposal plans of their UtP recommendations aim, on the one hand, at redefining their NPE
exposures (sales of UtP, net of the disposals associated to several strategies to reduce the NPE ratios and on the other hand, at
bailouts, were limited in terms of numbers of transactions and reshaping their operating model to progress towards a further
in EUR volumes in 2017). industrialization of the overall loans management. Regulatory
pressure on the Italian banks aimed at reducing their NPE ratio
The first months of 2018 also witnessed a significant increase is focusing even on UtP that always more frequently are under
in the NPE provisions within the Italian banks led by the investigation in the course of the audit of the Regulators. ECB
application of IFRS9 for the first time. The adoption of the guidelines, whose application will be extended in Italy to the
international accounting principle led the average NPE Less Significant banks, the calendar provisioning (within the
provision of the top ten Italian banks as at March 2018 to ECB Addendum) and the aforementioned first time adoption
59% from 54% as at December 2017 (in particular Bad Loans’ of IFRS9, will continue to drive the strategic decisions of the
provision achieved 66% from 61% and the Unlikely to Pay’s Italian banks in the near future.
provision reached 38% from 35%).
Despite the political turmoil currently perceived by the market,
Over the last eighteen months, the real trendsetter of the in light of all the movements occurred over the last year, we
NPL market was the consolidation path of the servicing arena believe that the Italian NPE market is still rich with interesting
through the acquisition of several workout platforms by big opportunities and new potential and innovative initiatives.
players. Thus we wonder what’s next…?!

Pier Paolo Masenza Fedele Pascuzzi Vito Ruscigno Alessandro Biondi

Financial Services Deals Business Recovery Co-Head NPL Co-Head NPL
Leader Services Leader [email protected] [email protected]
[email protected] [email protected]
 The terms of NPL (“Non Performing Loans”) and NPE (“Non
Performing Exposures”) are used interchangeably within
this study. This recommendation was even explained in the
“Guidance to banks on non-performing loans (March 2017)”
released by ECB – Banking Supervision*

Content

Macroeconomic Scenario 5

Italian Real Estate Market 8

Legal and regulatory framework update 12

Italian NPL Market 16

Italian Banks overview 20

Focus on UtP Italian Market 27

The Servicing Market 34

Reulatory changes 43

Recent market activity and outlook 52

Appendix 55

* “Guidance to banks on non-performing loans (March 2017)” by ECB, par. 1.2, pag.6 “Scope of this Guidance”and par. 5.1, pag. 47 “Purpose and Overview”

4 | The Italian NPL market - What's next...?!

Macroeconomic
Scenario
Key Message: Following the 2017 positive trend,
the European economic performance is expected
to be shown robust also in 2018, with inflation
set to remain stable. During 2018, total
investments should continue growing, since they
could still benefit from supportive financing
conditions, a stronger business sentiment and
higher corporate profitability.

PwC | 5
During the first half of 2017, the pace Chart 1: EU main economic drivers
of the European economic growth
surpassed expectations, thanks to 2017 2018F 2019F
resilient private consumption and
moderate improvements in the labour
market. During the following months,
a strong consumer and business 7.8
7.3 7.0
sentiment has suggested that this
robust economic performance should
prolong to the near-term.

After peaking 2.3% in 2017, EU GDP 2.3 2.1

1.9 1.7 1.7 1.8 1.7 1.8 1.8
growth is set to moderate slightly
to 2.1% in 2018 and to 1.9% in
2019 (projections for 2019, given
the ongoing withdrawal of the UK
-1.2 -1.1 -0.9
from the EU, are based on a purely
technical assumption of status quo in
GDP (%) Inflation (%) Unemployment rate Current Account Budget Balance
terms of trading relations between the (% total labour force) (% GDP) (% GDP)
country and the other EU27).
Source: PwC analysis on European Economic Forecast Autumn 2017.
Italian GDP is forecast to decrease to Unemployment rate as a % of total labour force, current account balance and budget balance as a % of GDP.

1.3% in 2018 and then reach 1.0%

in 2019. Export growth is predicted
to lose some strength due to the
appreciation of the Euro, while public
and private consumption are projected Chart 2: Italian main economic drivers
to decelerate.
2017 2018F 2019F
During 2017, European inflation 11.3
10.9
oscillated between 1.3% and 2.0%, 10.5
mainly driven by the impact of energy
base effects. In 2018, inflation is
projected to remain quite stable
(1.7%), peaking 1.8% in 2019.

Since the renewed fiscal incentives

included in the 2018 budget are 2.5 2.5 2.3
expected to further empower growth 1.5 1.3 1.4 1.2 1.5
in the labour market, the Italian 1.0
unemployment rate is projected
to gradually decline: the rate is
forecasted to reduce to 10.9% in 2018 -1.8 -2.0
and 10.5% in 2019. -2.1
GDP (%) Inflation (%) Unemployment rate Current Account Budget Balance
(% total labour force) (% GDP) (% GDP)

Source: PwC analysis on European Economic Forecast Autumn 2017.

Unemployment rate as a % of total labour force, current account balance and budget balance as a % of GDP.

11.9 2015 2016F 2017F

11.4 11.3

6 | The Italian NPL market - What's next...?!

-4
The EU current account surplus is Chart 3: Total investments volume trend
set to exhibit a stable trend (1.8%
for both 2018 and 2019): in fact,
3.5 3.8 3.8
notwithstanding robust import 4.0 3.4
3.0 3.1
growth, net trade should contribute 3.7
only marginally to growth over the
next 2 years. In Italy the surplus is 2.0 2.8 2.7
2.5
forecasted to reach 2.5% in 2018 and 1.9
2.3% in 2019.
0.0
In the first half of 2017, higher
demand expectations, supportive
financing conditions, lower -2.0
uncertainty, strong business sentiment -2.3
and increasing corporate profitability
-4.0
contributed to a positive setting for
2014 2015 2016 2017 2018F 2019F
corporate investment. Investments
are forecast to go on growing at this
Italy EU
robust pace, before slowing down in
2019.
Source: PwC analysis on European Economic Forecast Autumn 2017.

The improved outlook for nominal

GDP growth and low interest Table 1: Government Gross Debt Ratio per country
rate levels generate favourable
snowball effects in the public
Government
sector deleveraging process, with Trend
Gross Debt 2014 2015 2016 2017 2018F 2019F
Government Gross Debt Ratios 2018-2019F
Ratio (% GDP)
projected to follow a downward trend
in almost all Member States (for
Italy 131.8 131.5 132.0 132.1 130.8 130.0
example, for Italy, this Ratio is set
to be 130.8% in 2018 and 130.0% in EU 88.2 86.1 84.8 83.5 81.6 79.8
2019). Spain 100.4 99.4 99.0 98.4 96.9 95.5
France 95.0 95.8 96.5 96.9 96.9 96.9 =
UK 87.4 88.2 88.3 86.6 85.3 84.2
Germany 74.6 70.9 68.1 64.8 61.2 57.9

Source: PwC analysis on European Economic Forecast Autumn 2017.

PwC | 7
Italian Real
Estate Market
Key Message: In 2017, the Italian Real Estate
market registered a 2.1% growth compared to
2016, mainly driven by transactions related to
residential assets. Investments in Real Estate
reached €11.1 billion in 2017, with offices
continuing to represent the major asset class
for investment.

8 | The Italian NPL market - What's next...?!

Volume of Real Estate
transactions in 2017

In 2017, the Italian real estate market Residential sales in 2017 have During 2017, non residential asset
has been continuing on its positive increased throughout each region of classes showed a slight decrease,
trend, driven mainly by sales of Italy with respect to 2016. The North accounting for 2.5% compared to
residential and industrial properties. showed the greatest positive results, 2016. While continuing to account
with a 3.4% increase over 2016, for a small proportion of the total,
The most significant percentage followed by the Centre and South with the industrial segment is the sector
growth, compared to the previous +1.9% and +1.4%, respectively. registering the highest growth rate,
year, was recorded in the industrial See Table 3. at 6.7%. See Table 4.
building sector (+6.7%). See Table 2.
Appurtenances (which include
garages, basements and parking spots)
and other sectors are showing a strong
decrease, due to provisional data.

Table 2: Italian NTN1 comparison by sector

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Delta (%)
Asset type 2016 2017
2016 2016 2016 2016 2017 2017 2017 2017 2016-2017
Residential 115,194 143,298 123,476 146,896 121,972 145,527 122,373 152,608 528,865 542,480 2.6%

Office 2,025 2,413 2,510 3,000 2,362 2,486 2,584 2,922 9,946 10,354 4.1%

Retail 6,776 7,598 7,188 9,024 6,215 7,176 6,340 8,384 30,586 28,115 -8.1%

Industrial 2,121 2,897 2,565 3,704 2,329 2,996 2,894 3,818 11,287 12,038 6.7%

Total 126,116 156,206 135,738 162,624 132,878 158,186 134,191 167,732 580,684 592,987 2.1%

Appurtenances2 87,554 110,015 94,007 119,427 85,291 101,566 85,386 111,646 411,003 383,889 -6.6%

Other3 10,792 13,400 12,726 15,660 12,663 14,464 12,661 16,963 52,578 56,751 7.9%

Source: PwC publication “Real Estate Market Overview – Italy 2017”.

1. NTN is the number of standardized real estate units sold, taking into account the share of the property transferred.
2. Appurtenances comprehend properties such as basements, garages or parking spots.
3. The sector “Other” includes hospitals, clinics, barracks, telephone exchanges and fire stations.

PwC | 9
Table 3: Residential NTN by geographic area

Delta (%) Delta (%)

Area Region Year 2015 Year 2016 Year 2017
2015-2016 2016-2017
Provinces 72,648 89,901 93,060 23.7% 3.5%
North No Provinces 157,819 192,015 198,394 21.7% 3.3%
Total 230,467 281,916 291,454 22.3% 3.4%
Provinces 45,425 51,577 53,027 13.5% 2.8%
Center No Provinces 49,041 58,159 58,805 18.6% 1.1%
Total 94,466 109,736 111,832 16.2% 1.9%
Provinces 33,931 38,921 40,385 14.7% 3.8%
South No Provinces 85,771 98,292 98,809 14.6% 0.5%
Total 119,703 137,214 139,194 14.6% 1.4%
Provinces 152,004 180,400 186,472 18.7% 3.4%
Italy No Provinces 292,632 348,465 356,008 19.1% 2.2%
Total 444,636 528,865 542,480 18.9% 2.6%

Source: PwC publication “Real Estate Market Overview – Italy 2017".

Table 4: Non residential NTN by geographic area

Delta (%)
NTN YE 2017 Office Q1 2017 Q2 2017 Q3 2017 Q4 2017 2016 2017
2016-2017
North 1,385 1,455 1,528 1,777 6,096 6,145 0.8%
Center 573 527 541 586 1,969 2,227 13.1%
South 404 504 515 559 1,881 1,982 5.3%
9,946 10,354 4.1%

Delta (%)
NTN YE 2017 Retail Q1 2017 Q2 2017 Q3 2017 Q4 2017 2016 2017
2016-2017
North 2,843 3,400 3,081 4,052 15,003 13,376 (10.8%)
Center 1,434 1,629 1,485 2,002 6,822 6,550 (4.0%)
South 1,938 2,147 1,774 2,330 8,761 8,189 (6.5%)
30,586 28,115 (8.1%)

NTN YE 2017 Delta (%)

Q1 2017 Q2 2017 Q3 2017 Q4 2017 2016 2017
Industrial 2016-2017
North 1,536 1,997 1,919 2,620 7,344 8,072 9.9%
Center 381 501 424 622 1,871 1,928 3.1%
South 412 498 550 577 2,073 2,037 (1.7%)
11,287 12,038 6.7%

Source: PwC publication “Real Estate Market Overview – Italy 2017”.

10 | The Italian NPL market - What's next...?!

Investments in the non Chart 4: Investments in the non residential Real Estate industry - Investor type
residential Real Estate market
11,100
In 2017, the Italian commercial real
estate market recorded a transaction
volume of €11.1 billion, 22% more 17% 8,100
27% 26% 78% 9,100
compared to 2016, confirming the
increasing investor confidence and 70%
83% 60% 70%
demand for Italian real estate. The
73%
investment recovery has started in 5,130
2013 reaching the highest point in 4,383 74%
2017, the best year ever for Italian real 5,221
estate investment since the record 73%
level of €10 billion in 2007.
40%
The strong growth was driven by the 1,744 30% 27% 30%
413 22%
Office sector, €3.9 billion invested,
which represent 35% of the total
volumes of transactions. However, 2010 2011 2012 2013 2014 2015 2016 2017
there is a reduction in the Office
Italian investors Foreign investors Total investments (€m)
sector relative share on total (44%
in 2016), in favor of other types of Source: PwC publication “Real Estate Market Overview – Italy 2017”.
investments such as the Industrial,
Hotel and “Other” ones. The Retail
sector registered an increase by 6% Chart 5: Investments in the non residential Real Estate industry – Asset type
over the same period. Industrial
estates (+255) is growing fast, but 2016
the lack of supply across the country 5%
obliges the investors to widen their 12%
areas of interest and to concentrate on
value added operations. Offices
7%
€9,100
Milan and Rome still represent 7% mln 44% Retail
key markets for investments,
accounting for 32% and 11% of the
Industrial
total investment volume in 2017,
respectively. However, some investors 25%
have adapted their strategies to Tourist
the dynamic market and started to
consider secondary locations as well. 2017 Mixed
16%
Other*
5%
35%
10% €11,100
mln

12%
22%
Source: PwC publication “Real Estate Market Overview – Italy 2017”.
*”Other” includes banks, public administration and sovereign funds.

PwC | 11
Constant waves of
regulatory evolutions
are putting the
financial industry
players under
pressure

12 | The Italian NPL market - What's next...?!

The regulatory framework is on an ongoing evolution
which keeps shaping and influencing the entire financial
Ongoing regulatory pressures
industry. It no longer concerns only significant institu-
tions and banks: the scope is extended to include the less
significant institutions as well financial intermediaries Calendar Provisioning (ECB Addendum) &
and credit servicers and purchasers. A EU Commission Proposal

Most importantly, each wave of regulatory reforms affects

the industry in a dynamic way, meaning that besides any
B Guidelines for Less Significant Institutions
one-off impact the true impact has a forward looking
dimension leading towards an adoption of comprehensive
strategies and measures in an innovative and structured
manner. C IFRS 9 First Time Adoption

Calendar Provisioning (ECB Addendum) vs

A
European Commission Proposal
D Credit Servicers Directive Proposal
Timely NPL provisioning and write-offs continue to be a
matter of constant elaboration and a critical element in
the shaping of the institutions’ strategy and operating Guidelines on NPL Management for the Less
plan. Following the initial draft of the Addendum to the B
ECB NPL Guidelines (the final addendum was published Significant Institutions
on 15th March 2018) the European Commission also
published a consultation on the regulation of the The Bank of Italy, published in January 2018, the
minimum NPE Coverage on the 14th March 2018. final version of the NPL Guidelines addressed to the
Less Significant Institutions. The final version of the
While the Addendum of the ECB is a Pillar 2 requirement Guidelines is mostly* in line with the consultation
and applicable to all significant banks supervised by the published on September 2017, providing clear indications
ECB, the European Commission proposal is a Pillar 1 to banks on issues concerning strategy, governance and
requirement, therefore binding, and is applicable to all rules of conduct (as evidenced on PwC NPL Report Dec.
banks based on the update of the Capital Requirement 17 - Ready for the Breakthrough).
Regulation (CRR).

Key potential impacts of the Addendum

Increased capital / P&L charges for Increase in the number of disposal

the banks, taking into consideration an operations aimed at reducing total
impairment equal to 100% of the residual impairment levels as well as the level of
amount of the loan. sustainable losses.

Potential reduction in price expectations

Acceleration of the recovery activity with deriving from the combination of: increase
the objective to reduce the impairment in the number of disposal operations and
levels. increase of the negotiating power of the
potential NPL buyers.

* Indicatively in the final version statistical methods for the valuation of real estate collateral can be used for Gross exposures under €300k instead of €150k when in consultation.

PwC | 13
C IFRS 9 Adoption
Key elements of the directive proposal
As of 1st January 2018, IFRS 9 substitutes IAS 39, adding
further pressure on the banks. The loan provisioning policy
is being continuously challenged. • Requirements for credit servicers authorization:
• EU citizen or legal person; in case of legal person:
reputation, police records and insolvency/
bankruptcy situation;
Potential impacts of the IFRS 9 • appropriate governance arrangements and internal
First Time Adoption control mechanisms;
• appropriate policy for the treatment of borrowers;
• Capital impact • complaints recording and handling procedures.
• Strategic impact
• Business processes impact • Obligation for a public register set-up

• Contractual relationship between credit servicer

The transitory regime of the IFRS 9 adoption, which and creditor. Written agreement outlining:
foresees a capital absorption (within a five year period • a detailed description of the services;
from 2018 to 2022) of the losses deriving from the • remuneration level and calculation;
implementation of the IFRS 9 instead of a P&L impact, • extend of representation;
will be also applicable to the financial intermediaries (ex. • an undertaking by the parties to law compliance.
Art. 106 TUB) as of the end of the financial year 2018 or
throughout the year as published by Bank of Italy (Bank of • Rules for outsourcing.
Italy communication 09/04/2018).
• Provision of cross-border services.
Directive on credit servicers and credit • Data Templates: EBA shall develop data standards for
D
purchasers the use of credit institutions.

Following the 2017 “Action Plan to tackle NPL in Europe”, • Penalties.

the EU Commission issued a proposal for a directive
with the aim to harmonize requirements and create a • Supervision: At least yearly with the extend based
single market for credit servicers and credit purchasers. on the size, nature, scale and complexity of the credit
Outsourcing the servicing of a part of the NPL portfolio servicer.
to a specialized credit servicer or selling the credit
agreement to an adequate purchaser may lower the cost
of entry for potential loan purchasers by increasing the
accessibility and reducing the costs of credit servicing.
The key elements of the directive can be evidenced on the
table on the right. The proposal applies to purchasers and
servicers of credit originally issued by a credit institution
irrespective of the borrower type.

14 | The Italian NPL market - What's next...?!

 Key Potential impacts of the IFRS 9 FTA

Capital impact* Strategic impact Business processes impact

• ECB: According to a study • Client selection: Exposures • Origination: necessity to adopt
performed by the ECB a 40bps will be more vulnerable to a forward looking view on loan
impact is estimated for the deteriorating status migration. origination.
significant banks while a 59bps
impact on the CET1 Ratio for the • Collateral Management: • Decision making powers.
less significant institutions. The presence of high quality
collaterals can mitigate the effects • Pricing Risk – Adjusted models:
• Bank of Italy: As it concerns of a Stage migration. will need to be adjusted to
the Italian banks the equivalent consider the increased cost of risk.
CET 1 impact is estimated to be • Duration: The probability of
equal to 37 bps for the significant default of the exposures is • Credit monitoring: increased
institutions, while for the less potentially greater with the importance of EWIs.
significant institutions equal to increase of the duration of the
47 bps. same exposure. • People Management: increased
responsibility will fall on the
retail network.

*Source: ECB press release 24/11/2017; Bank of Italy financial stability Report November 2017.

PwC | 15
Challenger
Banks value
proposition Key Message: banking and financial services are
undergoing a radical transformation.
The so-called challenger banks are spreading
across the market, thanks to their slim structure
that allows them to focus on niche segments not
covered by the traditional banking market.

16 | The Italian NPL market - What's next...?!

Overview

The banking credit crunch that hit the Italian market over The goal of challenger banks is to disrupt the traditional
the last years generated an amplified effect in terms of lack of banking system with innovative models, mostly based on
credit facilities on the SME segment, which represent 95% of “state of the art” technology, and to obtain profits in niche
Italian enterprises. In spite of the economic recovery, banks segments, without pursuing a “generalist” approach. In
continue to curb financing. particular the suggested model leverages on:
• sectors not covered comprehensively by traditional
The traditional banks seem to be unsuited to revive the banks;
situation as: • business model for all economic cycles (during the crisis
• traditional credit processes are no more suitable for NPL sector boomed and some players setup new niche
SME’s firm as the typical credit deals are not profitable business lines);
for the bank; • highly scalable business (through digital channels
• credit origination is still based on traditional channels: avoided physical network constraints);
no digital experience for SME’s; • low risk assets: if risk is mitigated via creditor/debtor
• the traditional banking system is unable to provide selectivity or Public Government warranty.
an efficient exploitation of credit enhancement
opportunities;
• SME is tracked as “high risk profile counterpart” for
traditional banks.

Both the obsolescence of Traditional Banks’ credit processes

and SME’s high risk profile give rise to the need for
alternative finance players (challenger banks / specialized
lenders), able to focus on specific market segments rather
than the entire retail banking value chain.

Chart 6: Some attractive aspects of challenger banks

+20% -30% +15% +2%

Cost Income Dividend Divident

ROE ratio Pay Out Yield

Traditional Bank -4% -63% -45% -3%

Challenger Bank -24% -30-35% -60% -5%

PwC | 17
The details of the target segments where to focus the Value Proposition:

€ 559 billion Working Capital Management market size.

Working IFRS9 will enhance WCM services provided by banks.
Capital
40% of the new finance needed in Management + 5000 new SMEs
the UtP market (€104 billion) for +9.7% new microenterprises
forbearance activities come from +7.8% SME new investments
structured finance Structured SME Lending Low Capital Absorption if eligible
10 operations of the biggest Finance
for the Central Warranty Government
independent servicing platforms Fund (up to 80% guaranteed)
closed Challenger
Bank
Source of funding alternative + 11,6% of loans are granted by
to traditional banks, with higher Retail Deposits Consumer Backed Loans
deposit rate thanks to a lower Consumer +9.8% new contracts’ value
& Digital
cost/income Ratio. Loans Salary +8.8% new contracts in place
Payments
Bancassurance services provided Backed Low Capital Absorption
Bancassurance
through cross-selling strategies. (RWA 70%-30%)
Asset
Management
The Italian market is consolidating in the segment and
new initiatives that leverage on digital channels are
emerging.

Sources: Report Cerved PMI 2017; NPL Report July2017; CRIF; Assofin Consumer Loans data 9M17;
The Italian Insurance Market 2016 figures + 3M17 overview PwC; Il Giornale 2017; Osservatori.net 2017

The potential return and capital absorption of the vertical segments:

Non conforming Structured Structured

Small Business Salary Backed
Loans Finance for finance / Over 60 Loans
Lending Consumer Loans
(“mutui in asta”) UtP / NPL syndicated Loans

Leverage on
Development Development of Leverage Leverage on
agents network
Positioning on a targeted a specific desk to on digital agents network to
to setup the
auctions financing offer trade structured marketplace setup the product
product and third
(residential and to support the finance activities and network of (potential upside
parties providers
commercial). restructuring of and special bankers to setup through digital
for operating
UtP positions. lending. the business unit. sales processes).
machine.

Credit RWA: Credit RWA: Credit RWA: Credit RWA: 75% Credit RWA: 70%
Credit RWA: 35%
35% - 100% 125% 125% - 100% - 30%
RoCET1:
RoCET1: RoCET1: RoCET1: RoCET1: RoCET1:
15% - 18%
12% – 18% 25% - 35 % 15% - 25% 8% - 12% 8% - 12%

18 | The Italian NPL market - What's next...?!

Key Success Factors

Even if the potentiality of the Challenger Banks sector in • develop a capability of “Fast Prototyping”: the whole
Italy is huge due to its low level of maturity – as perfectly operating structure of the player must be able to quickly
understood by some foreign Private Equity Funds and evaluate opportunities, implement products and value
National Entrepreneurial initiatives – , the setup of the right propositions for the customers, beat the competition on
business model (commercial and operational) it’s not easy, time-to-market ( for example “time-to-yes” less than a
considering the relatively easy way to collect retail funds and day in SME lending activities);
the difficulty in selecting the right counterpart to finance
(SME, NPL / UtP, Public Government Factoring etc.). • focus on scalability: build an operating model that
is easily scable based on the success of the initiatives
Main Key Success factors that an investor must consider (leverage on cloud technologies and Business Process
during the setup of the initiative: Outsourcing);

• define the target Value Proposition of the Challenger • extensive use of innovative technology: invest in
Bank: focus on few solid initiatives and avoid a wide innovation where the benefits are tangible (for example,
spread catalogue of banking services; on the Customers Front End to speed up the commercial
offering or Robotics to obtain a “best in class” cost/
• select the right team: the initiative is highly based on income Ratio) and select the core components that
industrial rationales and the right skills in place together guarantee the full regulatory compliance at “almost zero”
with the right experience can guarantee a successful implementation cost for the player.
execution of the plan;

PwC | 19
Italian NPL
Market
Key Message: NPL volumes in the Italian market
recorded a massive decrease over the last year.
The NPL stock, starting from a volume of €324
billion (GBV) at the end of 2016, declined
reaching €264 billion at the end of 2017.
All the categories, Bad Loans, UtP and Past Due
illustrate this positive trend.

20 | The Italian NPL market - What's next...?!

Asset quality

Chart 7 illustrates the reduction in the NPL stock. After Chart 8 demonstrates that the net Bad Loans amount
reaching its maximum at YE 2015 (€341 billion of GBV), followed the same positive trend that invested the Italian
the stock consistently reduced over the last two years, NPL market of the last two years. Their net amount reached
reaching €264 billion at YE 2017. €64 billion at YE 2017 (€87 billion at YE-2016). The Bad
Loans’ Net NPL Ratio declined to 4.3% (5.6% at YE-2016).
At the end of 2017 Gross Bad Loans decreased to
€165 billion, reducing by €35 billion over the last year.
Unlikely to Pay and Past Due showed the same declining trend
standing at €94 billion (from €117 billion at YE-2016) and €5
billion (from €7 billion at YE-2016).

Chart 7: Gross NPE and Bad Loans trend

Total NPE (€bn) Gross NPL / Loans to Customers (%) Gross Bad Loans / Loans to Customers (%)

Bad Loans (€ bn) Unlikely to Pay (€ bn) Past Due (€ bn) CAG
R: -
12%

341 324
% 326 264
+22
G R: 12 14
CA 283 7
127 117
18
237 131 5

194 21 94
109
13
157
91
132 12
74 200
16
85 184 200
66 165
57 156
9 125
107
33 78
59
42
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
4.9% 7.8% 9.3% 11.3% 14.3% 17.8% 21.0% 22.0% 21.1% 17.6%
2.5% 3.5% 4.6% 6.3% 7.5% 9.8% 11.8% 12.9% 13.0% 11.0%

Source: PwC analysis data of Bollettino Statistico di Banca d'Italia and ABI Monthly Outlook
Data referred to the Italian Banking system only (excluded Cassa Depositi e Prestiti).

Chart 8: Net Bad Loans Trend

61.0%
56.5%
55.6%
54.0%
50.3% 48.7%
89
42.9% 43.7% 87
84
39.7% 80
34.0%
62 64
60

47
39
60
24 5.4% 5.7% 5.6% 4.3% Net Bad Loans (€bn)
2.8% 3.5% 3.8% 5.0%
1.4% 2.3% Net Bad Loans/Loans to Customers (%)
Bad Loans coverage ratio (%)
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Source: PwC analysis data of ABI Monthly Outlook.

Data referred to the Italian Banking system only (excluded Cassa Depositi e Prestiti).
PwC | 21
Looking at the Bad Loans stock Chart 9a: Breakdown of Gross Bad Loans by region* (YE 2017)
composition:
1.5%
• the breakdown of Gross Bad 21.9%
Loans shows that Lombardy and 1.5%
Lazio regions have the highest
concentration of stock with 21.9%
and 11.1%; 8.9%
6.0%
• at the same time, these two regions 9.8%
have a Gross Bad Loans Ratio equal
to, respectively, 10.5% and 12.0%; 1.8%
9.2% 2.9%
• the northern regions have a lower
Gross Bad Loans Ratios compared 2.0%
2.5%
to the ones in the Centre and South
of the Country; 11.1%
5.0%
• the percentage of secured Bad 2.3%
Loans is increasing from the 48% 6.7%
of 2016 to the 50% of YE-2017;
• at the end of 2017, the “Corporate >10%
& SME” sector continues to 1.8%
>5% - 10%
represent the greatest share of 5.4%
Gross Bad Loans, standing at 66% >3% - 5%
and followed by the "Consumer" <3%
sector (24%).
Source: PwC analysis on data of “Bollettino Statistico” of Bank of Italy.
* Unique percentage for 1) Valle d’Aosta and Piemonte, 2) Abruzzo and Molise, 3) Puglia and Basilicata.

Chart 9b: Breakdown of Gross Bad Loans Ratio by region* (YE 2017)

6.3%
10.5%

9.2%

11.4%
10.0%
12.2%
9.2%
15.1% 13.9%

16.7% 15.9%

12.0%
14.3%
17.1%
16.0%

>18%
>16% -18% 18.0%
>14% - 16% 16.2%
<14%

Source: PwC analysis on data of "Bollettino Statistico" of Bank of Italy.

* Unique percentage for 1) Valle d’Aosta and Piemonte, 2) Abruzzo and Molise, 3) Puglia and Basilicata.

22 | The Italian NPL market - What's next...?!

Chart 10: Breakdown of Gross Bad Loans by counterparty (YE 2017)

1% 1% 1% 1% 1% 1% 2% 2% 2% 2%

20% 20% 20% 20% 19% 18% 16% 16% 17%

21%
9% 8% 8% 7% 8%
12% 11% 10% 9% 8%

67% 69% 70% 70% 71% 73% 75% 74% 73% 70%

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Corporate & SME Small family business Consumer Other**

Source: PwC analysis on data of "Bollettino Statistico" of Bank of Italy.

“Other” includes PA and financial institutions.

Chart 11: Secured Gross Bad Loans trend (% on total Bad Loans)

Counterparty
Corporate & SME
48% 50%
47%
66%
45% Individual
42% 24%
39%
38% 38% Family business
8%
36% 36% Other**
2%

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Source: PwC analysis on data of "Bollettino Statistico" of Bank of Italy.

** “Other” includes PA and financial institutions.

PwC | 23
The breakdown of Gross Bad Loans by economic On the other side, the Breakdown of Gross Bad Loans by
macrosector (Chart 12) shows that Real Estate, ticket size (Chart 13) illustrates that the 31% of the NPL
Constructions and Manufacture account for over 71% Italian market is represented by exposures with a value of
of the Italian NPL market. more than €5 million.

Chart 12: Breakdown of Gross Bad Loans by macrosector Chart 13: Breakdown of Gross Bad Loans by ticket size

2% 2%1% 3% 3%
10% 4%
16% 6%

1% 31% 12%
5%

2% 21%
8%

15% 1%
1% 9%

12%
24% 15%
Agriculture, forestry and fishing Accomodation services
Manufacturing products Information and communication 50 to 30k € 500k to 1mln €
30k to 75k € 1mln to 2.5mln €
Electricity, gas, steam and Real estate
75k to 125k € 2.5mln to 5mln €
air-conditioning supply
Waste-management and Professional, scientific and
125k to 250k € 5mln to 25mln €
remediation products technical activities
Administrative and 250k to 500k € More than 25mln €
Construction
support services
Wholesale and retail trade Other
Transportation and storage

Source: PwC analysis on data of “Bollettino Statistico” of Bank of Italy. Source: PwC analysis on data of “Bollettino Statistico” of Bank of Italy.

24 | The Italian NPL market - What's next...?!

Focus: UtP Chart 14a: Breakdown of UtP by region* (YE 2017)

2.4%
27.3%
The UtP stock composition at YE-2017
shows that: 1.2%

• the UtP breakdown by region

highlights the highest UtP levels 8.6%
in Lombardy (27.3%) and Lazio 4.2%
(13.2%), with a UtP Ratio equal, 9.6%
respectively, to 7.4% and 8.0%; 3.6%
7.6% 2.7%
• Friuli Venezia Giulia, Trentino Alto
Adige, Umbria, Marche, Abruzzo 1.6%
and Molise, Calabria and Sardegna 1.7%
each own a percentage of UtP
lower than 3%. 13.2%

1.7% 6.2% 3.3%

>10%
>5% - 10% 0.9%
>3% - 5%
<3% 4.1%

Source: PwC analysis on data of “Bollettino Statistico” of Bank of Italy.

* Unique percentage for 1) Valle d’Aosta and Piemonte, 2) Abruzzo and Molise, 3) Puglia and Basilicata.

Chart 14b: Breakdown of UtP Ratio by region* (YE 2017)

5.6%
7.4%

4.2%

6.2%
3.9%
6.7%
10.6%
7.0% 7.5%

7.6% 6.1%

8.0%
5.4%

6.9% 8.3%

> 9%
>7% - 9% 5.2%
>5% - 7%
<5% 6.9%

Source: PwC analysis on data of “Bollettino Statistico” of Bank of Italy.

* Unique percentage for 1) Valle d’Aosta and Piemonte, 2) Abruzzo and Molise, 3) Puglia and Basilicata.

PwC | 25
 Key Message: At the end of 2017 data on firms’ closures confirmed the dropping
trend emerged in the previous quarters: the most remarkable reduction pertains to
bankruptcies, which stand now back to the levels recorded during the early 2000s.

During 2017, 93,000 Italian companies started an insolvency Chart 16: Bankruptcies by type of company
procedure, highlighting a 5% drop with respect to the
previous year, a result which is quite distant from the negative
peak recorded in 2013 (that scored an overall amount of
109,000 procedures) (Chart 15). -6.4% -6.2%
-8.5% -8.2%
-11.7%
Data on the number of bankruptcies shows that the -14.4%
improvement observed in the first half of 2017 has strengthened:
in fact, as for YE-2017, 12,009 Italian firms went bankrupt (a
11.3% reduction with respect to 2016) and, in particular, in the
last quarter the year, they are estimated to amount to 3,242 Share capital company Partnership Others

(-4.8% if compared to the same period of 2016). The decrease YE-2016 YE-2017
involves all firms’ legal status, especially companies other than
share capital companies and partnerships (-14.4% with respect
to the previous year) (Chart 16). Moreover, this downturn is Chart 17: Non-bankruptcy procedures
shared among all Italian regions (firstly Piemonte, Liguria and
Lombardy) and all economic sectors, with a particularly positive
tendency for the industrial ones and that of construction.

The drop in the number of not-bankruptcy procedures,

started 3 years ago, is still continuing. The amount of
-18.8%
insolvency procedures started in 2017 (and different from
bankrupt) registered a reduction, compared to 2016, mostly -25.9%
concentrated within the construction sector, then followed by -29.2%

industrial firms and services companies (Chart 17).

Following the decreasing trend observed during the first half -42.3%
of the year, at the end of 2017 79,587 Italian firms overall
started a voluntary liquidation procedure, highlighting a Arrangement with creditors Others
4% drop with respect the same period of 2016. The decrease YE-2016 YE-2017
mostly pertains to partnerships (-11.3%), which have reached
the bottom level since 2001 (Chart 18).

Chart 15: Insolvency procedures Chart 18: Liquidations by type of company

9.2%

8.5%
7.0%
-4.0% -5.1%
-8.5%
-11.3%
-2.0%

-11.3%

-35.1% Share capital company Partnership

Bankruptcy Liquidation Other procedures YE-2016 YE-2017
YE-2016 YE-2017

Source: Osservatorio su fallimenti, procedure e chiusure di imprese, Cerved.

26 | The Italian NPL market - What's next...?!

Italian Banks’
Overview
Key Message: For the Italian banking industry,
2017 was a turnaround year, in terms of net
aggregated earnings, capital strengthening
and mergers. Along with these results, the
improvements in credit quality have been
significant: indeed Italian banks overall reduced
the stock of their Gross Non Performing Exposures
and 2018 is expected to be characterised by the
same deleveraging attitude as well.

PwC | 27
Recent Events

• During the last quarter of 2017, Banca Carige closed banks will be required to automatically depreciate these
the disposal of a €1,2 billion mixed secured - unsecured loans for the 100% of their book value, after 2 years if
portfolio of Bad Loans with Credito Fondiario, Davidson unsecured, after 7 years if secured. If confirmed, this
Kempner acquired a €320 million Bad Loans portfolio measure could eventually produce a stiffening effect on
from Banca Popolare di Bari and Cassa Centrale Banca the NPL disposal policies of many Italian banks.
closed with Seer Capital Management and Locam S.p.A. • Following some other significant events occurred in 2017,
the sale of a mixed secured – unsecured portfolio of Bad like the struggles of Carismi, Carim and CariCesena,
Loans for a total value of €885 million. those of Veneto Banca and Popolare di Vicenza, of MPS,
• In October 2017, the ECB issued an Addendum to its Carige and Creval, and like Unicredit €13 billion capital
guidance to banks on exposures included in the Non increase, for the Italian banking system year 2018
Performing category after January 1st, 2018: European promises to be as rich of changes and occurrences as the
previous one.

Chart 19: Net Bad Loans and Equity for the Top 10 Italian Banks

72%
12.6
55% 56% 57%
9.7 41%

22% 7.5 29%

6.5 20%
16% 12% Net Bad Loans (€billion)
4.1
3.1 2.9 Net Bad Loans Equity
0.8 Ratio (%)
1.2 0.3
UCG ISP MPS Banco BPM UBI BNL BPER Cariparma Pop. Sondrio Credem

Souce: Financial Statements as of YE-2017. Data affected by different write-off policies.

Chart 20: Gross NPE and Texas Ratio for the Top 10 Italian Banks

52.7
50.3 115% 119%
104% 105% 109%

92% 88%
45.1

81% 54%
65% 23.1

Gross NPE (€bn)

12.7
11.3 10.5
Texas Ratio (%)
5.1 4.2 1.3
UCG ISP MPS Banco BPM UBI BNL BPER Cariparma Pop. Sondrio Credem

Source: Financial Statements as of YE-2017. Data affected by different write-off policies.

* Texas Ratio defined as the Ratio between total Gross NPE and the sum of CET1 and provisions.

28 | The Italian NPL market - What's next...?!

Chart 21: Recoveries / Gross Bad Loans for the Top 10 Italian Banks

2.36 6.2% 6.3% 6.1% 6.3% 6.1%

4.6% 4.5%
3.8%
3.5%
1.71 3.2%

0.95 Recoveries (€ billion)

0.68
0.46 Recoveries / Gross
0.31 0.14 Bad Loans (%)
0.27 0.18 0.05
UCG ISP MPS Banco BPM UBI BNL BPER Cariparma Pop. Sondrio Credem

Source: Financial Statements as of YE-2017. Data affected by different write-off policies

Chart 22: Sales Proceeds / (Sales Proceeds + Losses on disposals) for the Top 10 Italian Banks

100%
96.0%
91.4% 93.7%
0.91

74.0% 75.3%
58.6%
2.58

38.9%
36.7%

0.14 0.35
0.02 0.0%
0.13 0.33
0.40 0.04
0.41 0.01 0.49 0.08 0.21 0.0 0.01
UCG ISP MPS Banco BPM UBI BNL BPER Cariparma Pop. Sondrio Credem

Sales Proceeds (€ billion) Sales proceeds / (Sales Proceeds+Losses on disposals) (%)

Losses on disposals (€ billion)

Source: Financial Statements as of YE-2017. Data affected by different write-off policies.

Chart 23: (Sales Proceeds + Losses on disposals + Recoveries) / Gross Bad Loans for the Top 10 Italian Banks

24.9%

5.85

13.9%
11.5% 12.1%

6.0% 6.7% 6.4% 7.1%

3.3% 3.9%

2.26
1.52
0.96 0.88 0.35 0.73
0.47 0.14 0.06
UCG ISP MPS Banco BPM UBI BNL BPER Cariparma Pop. Sondrio Credem

Sales Proceeds + Losses on disposals + Recoveries (€ billion) (Sales Proceeds + Losses on disposals + Recoveries) / Gross Bad Loans (%)

Source: Financial Statements as of YE-2017. Data affected by different write-off policies.

PwC | 29
Chart 24 focuses the Gross NPL Ratio Chart 24: Top 10 Italian Banks – NPE Peer Analysis as of YE-2017
and the NPL Coverage Ratio for the Top
10 Italian banks. As shown, the average Gross NPL Ratio (%)
for the two Ratios is respectively 16.0% 70%
and 49.4%. The differences comparing
MPS
the different banks are clear. On one 65%

side, MPS shows the highest Gross

NPL Coverage Ratio (%)

60%
NPL Ratio with 37.3% while, on the UCG
other side, Credem stands at the
55%
lower extreme of 5.2%. Considering BNL
the NPL Coverage Ratio, MPS again Average= 49.4%
50%
shows the highest value (67.2%) and
BPER
UBI the lowest (35.4%). The Coverage Credem
ISP
45% Pop.
Ratio is not directly comparable as it is Sondrio
influenced by several factors different 40%
Cariparma
from every bank: policies on write-offs, UBI Banco BPM

level of collateralization of the loans, 35%

vintage of the portfolio. Average= 16.0%
30%
The same analysis is reproduced 0 5% 10% 15% 20% 25% 30% 35% 40%
considering the Gross Bad Loans Ratio
and the Bad Loans Coverage Ratio Bubble size: Gross NPL
(Chart 25). Also in this case there are
Source: Financial statements as of YE-2017. Data affected by different write-off policies.
significant differences comparing the
Top 10 banks. MPS reaches the peak
with a Gross Bad Loans Ratio of 27.0%
and Credem represents the lowest
(3.2%) the top 10 average stands at Chart 25: Top 10 Italian Banks – Bad Loans Peer Analysis as of YE-2017
10.3%. The relative Coverage Ratio
Gross Bad Loans Ratio (%)
indicates two opposite peaks: 77.2%
85%
with MPS and 44.8% with UBI (the
average stands at (61.1%). 80%
MPS

Bad Loans Coverage Ratio (%)

75%
UCG Pop.
70% Sondrio

65% ISP
Credem BNL
BPER
60% Average= 61.1%
Cariparma ISP

55% BPER Banco BPM

50%
UBI

45%
Average= 10.3%
40%
0% 5% 10% 15% 20% 25%

Bubble size: Gross Bad Loans

Source: Financial statements as of YE-2017. Data affected by different write-off policies.

30 | The Italian NPL market - What's next...?!

Chart 26 provides a snapshot for the Chart 26: Top 10 Italian Banks – Unlikely to Pay Peer Analysis as of YE-2017
Unlikely to Pay Ratio and its Coverage
Ratio. The average for the first Ratio Gross Unlikely to Pay Ratio (%)
is 5.5% while for the second is 30.4%. 48%

Unlikely to Pay Coverage Ratio (%)

UCG
The Gross Unlikely to Pay Ratio shows
MPS
its highest value with MPS (9.5%) 43%

and the lowest with Credem (1.8%),

whereas the average stands at 5.5%. 38%
BNL Pop. Sondrio
The Unlikely to Pay Coverage Ratio is
33%
on average 30.4%: UCG stands at the Average= 30.4%
ISP
top with 43.2%, Credem at the bottom BPER
28%
with 19.4%.
23% Cariparma Banco BPM
UBI
Credem
18%
Average= 5.5%
13%
0% 2% 4% 6% 8% 10%

Bubble size: Gross Unlikely to Pay

Source Financial statements as of YE-2017. Data affected by different write-off policies.

Chart 27: Top 10 Italian Banks – Past Due Peer Analysis as of YE-2017
Chart 27 illustrates the Past Due
Ratio and the Coverage for the banks Gross Past Due Ratio (%)
analyzed. Banca Popolare di Sondrio 40%
UCG
records the highest Gross Past Due
Ratio (0.6%) while ISP and Banco BPM 35%
the lowest (0.1%). The average stands

Past Due Coverage Ratio (%)

at 0.2%. The relative Coverage Ratio 30%
indicates two peaks: on one side, UCG MPS
with 37.1%, on the other side, UBI with 25%
ISP
6.4% (the average is 17.9%).
20% BNL Average= 17.9%
Credem
15%
Banco BPM Pop. Sondrio
BPER
10% Cariparma

5%
UBI Average= 0.2%
0%
0.0% 0.1% 0.2% 0.3% 0.4% 0.5% 0.6% 0.7%

Bubble size: Gross Past Due

Source Financial statements as of YE-2017. Data affected by different write-off policies.

PwC | 31
Chart 28 analyzes the movements in Chart 28: Top Italian Banks – Bad Loans movements (YE-2016 vs YE-2017)
the Gross Bad Loans Ratio and the Bad
YE 2016 YE 2017
Loans Coverage Ratio between 2016
and 2017. At YE-2017 the average Bad Gross Bad Loans Ratio (%)
80%
Loans Ratio reaches 10.3%, whereas
MPS
75%
the Coverage Ratio stands at 61.1%. UCG
The snapshot indicates that most of

Bad Loans Coverage Ratio (%)

70% Banco BPM
Pop. Sondrio
the top 10 Italian Banks have improved 65%
BNL
Credem ISP
their Gross Bad Loans Ratio during
60% Average= 61.1%
2017. Cariparma
BPER
55%

50% UBI

45%

40%
Average= 10.3%
35%
0% 5% 10% 15% 20% 25%

Source: Financial Statements as of YE-2017. Data affected by different write-off policies.

Chart 29 shows that, all the banks Chart 29: Top Italian Banks – Unlikely to Pay movements (YE-2016 vs YE-2017)
analyzed experienced a decrease in the
Unlikely to Pay NPL Ratio. At YE-2017 YE 2016 YE 2017
the average Unlikely to Pay NPL Ratio Gross Unlikely to Pay Ratio (%)
45%
stands at 5.5%, while the Unlikely UCG
Banco BPM
to Pay Coverage Ratio is 30.4%. Pop.

Unlikely to Pay Coverage Ratio (%)

BNL MPS
The Unlikely to Pay Coverage Ratio Sondrio
decreased for Banco BPM (40.2%),
30% ISP
UBI (1.5%) and BNL (1.2%).

Cariparma UBI BPER

Credem
15%

Average= 5.5 %
0%
0% 2% 4% 6% 8% 10% 12% 14% 16% 18%

Source: Financial Statements as of YE-2017. Data affected by different write-off policies.

32 | The Italian NPL market - What's next...?!

Chart 30 illustrates the movements Chart 30: Top Italian Banks – Past Due movements (YE 2016 vs YE 2017)
in the Past Due Ratio and Past Due
YE 2016 YE 2017
Coverage Ratio. At YE-2017, the Past Due Ratio (%)
average Past Due Ratio stands at 0.2%, Banco
BPM
whereas the Past Due Coverage Ratio
UCG
is 17.9%. In 2017 all the banks, except 30%
for UBI, experienced a decrease in their

Past Due Coverage Ratio (%)

MPS
Past due Ratio (the average decrease
is 38.3%). The average decrease of the ISP
BNL
Average= 17.9%
Past Due Coverage Ratio is instead of
Pop. Sondrio
5.4%. Credem
15%

Cariparma BPER

UBI
Average= 0.2%
0%
0.0% 0.1% 0.2% 0.3% 0.4% 0.5% 0.6% 0.7% 0.8% 0.9% 1.0% 1.1% 1.2%

Source: Financial Statements as of YE-2017. Data affected by different write-off policies.

Chart 31: Top Italian Banks – Relation between MarketCap/TBV and NPL Ratio

160%
Mkt / TBV

IFIS

140%

120% CREDEM
ISP
100%
Creval
80%
UCG
60% Pop. Banco BPM
Sondrio
40% UBI BPER
MPS
Carige
20%

0%
0% 5% 10% 15% 20% 25%
Gross NPE ratio

Source: Financial Statements as of YE-2017.

PwC | 33
Focus on UtP
Italian market
Key Message: At the end of FY 2017, the total
Italian UtP exposure amounted to €94 billion,
the 80% of which is concentrated within the top
10 banks. Despite the declining trend, the UtP
magnitude is still huge.

34 | The Italian NPL market - What's next...?!

Our view

UtP is a major issue for the Italian banking system for several Capital requirements and short/medium-term plans of
reasons. The NPE figures at the end of 2017 still show a reducing their NPE Ratio could lead to massive UtP sale
huge amount of UtP (€94 billion of GBV), of which 80% is opportunities (single names and/or small portfolios).
concentrated within the top 10 banks.
Industrial capabilities’ self-assessment along with
The recent requirements mandated by the European identification of potential upside coming from the proper
Regulators (the ECB guidelines, the calendar provisioning, restructuring of the UtP could even lead the banks to
within the ECB Addendum, and the application of IFRS9 internal management or external management (through
from 1 January 2018) will undoubtedly drive the Italian specialised servicers) of the UtP.
banks’ management of the current stock, next wave of NPE
and the UtP deleveraging plans as well.

UtP distribution (€ billion) - Top 10 Italian banks

€bn

20%
19.0 94
0.5%
2%
53% 4% 2%
1.8 0.5
4% 3.3 2.0 -11% vs. PY -8% vs. PY
6% +1% vs. PY
3.4 -17% vs. PY
10% 5.2 -15% vs. PY
9.0 +1% vs. PY
12% -22% vs. PY
11.6
-24% vs. PY
19% Carige 3.1 3%
17.9
-10% vs. PY
Creval 2.2 2%

22%
ICCREA 1.2 1%
20.3 Banca IFIS 0.7 0.7%
-17% vs. PY
C.R. Bolzano 0.4 0.4%
Others 10.5 11%

UniCredit Intesa MPS Banco BPM UBI BNL BPER Cariparma BP Sondrio Credem Others Total
Sanpaolo

40% 34% 26% 39% 41% 30% 32% 40% 42% 35% Gross UtP/Gross NPE
11% 12% 37% 20% 13% 17% 20% 11% 15% 5% Gross NPE Ratio

Source: PwC analysis of banks’ financial statements as at 31/12/17. The list of Top 10 Italian banks is based on the Gross Book Value of Total Exposure as at 31/12/16 (source:
ABI). ICCREA exposure as at 30/06/17.

PwC | 35
UtP Coverage Ratios vs. Gross
UtP Ratios

Top 10 Italian Banks featured

generally higher provisions of UtP
in 2017 vs 2016, resulting in higher
Coverage Ratios (avg. 30.4% in 2017).
In particular UniCredit and Intesa Key Message: The UtP average Coverage Ratio of the Top 10
Sanpaolo, both below the average
Italian banks reached 30.4% (29.1% in 2016) while their Ratio
Gross UtP Ratio (4.3% and 4.1%
respectively), increased their UtP on total loans declined from 6.5% to 5.5%. The Italian banks are
provisions reaching UtP Coverage equal on the right path but further efforts are required.
to 43.2% (UniCredit) and 27.9% (Intesa
Sanpaolo) at the end of 2017.

MPS, third bank in terms of UtP Chart 32: Top 10 Italian banks
exposures, showed Gross UtP Ratio
(9.5%) lower than in 2016 (11.5%) with Bubble size: Unlikely to Pay
gross exposure 2017
an average UtP Coverage of 40.6% in
Bubble size: Unlikely to
2017 compared to 40.3% in 2016. The Pay gross exposure 2016

former is due to the recognition of Bad 50%

UTP Coverage ratio 31/12/2017

UCG YoY shift (FY 2016 - FY 2017)

Loans previously classified as UtP.
45%
Ratios of Banco BPM* showed a MPS
reduction of the Gross UtP Ratio (7.6% 40%
in 2017 vs 9.5% in 2016) as well as UtP BNL

Coverage (27.3% in 2017 vs 28.0% in 35%

Pop.
2016). Likewise, UBI dropped its Gross ISP Sondrio Avg. Top 10 (30.4%)
30%
UtP Ratio from 5.9% to 5.3% and UtP
Coverage from 23.3% to 22.9%. Banco
25% BPM*

20%
CREDEM BPER
UBI
Cariparma
15%

Avg. Top 10 (5.5%)

10%
1% 3% 5% 7% 9% 11% 13%
Gross UTP ratio 31/12/2017

*Ratios of Banco BPM as at 31/12/16 were calculated as sum of the figures of Banco Popolare and BPM
(merged together in Banco BPM from 1/01/2017).

36 | The Italian NPL market - What's next...?!

Inflows and outflows

In 2017, total outflows of the Top 10 Italian banks remained

stable at around €44 billion, despite lower outflows to Bad
Loans: 21% in 2016 vs 16% in 2017.

The inflows in 2017 decreased from €33 billion to €30 billion,

mainly due to the lower inflows from performing and Past
Key Message: At the end of 2017, despite the
Due exposures.
decreased outflows to Bad Loans (-5%) and
In particular, UtP gauged a firm decline of inflows from inflows from performing (-2%) compared to
performing loans over the last 2-year period: 16% in 2016 vs 2016, 50% of UtP remained as such. The UtP
14% in 2017. issue for 2018 still lies in the management of
their massive stock.
UtP which remained UtP during 2017 amounted to
€44.5 billion (i.e. 50% out of €89 billion), indicating how
the main issue for the Italian UtP lies mainly in their massive
stock and a management not yet able to target deleverage
solutions.

Chart 33: Unlikely to Pay inflows and outflows from 2015 to 2017 - Top 10 banks FY17 (€ billion)

Outflows Inflows
(43) 33
Outflows Inflows
(44)
99 30

(5%) 89

(13%) 9% (7%) 15% 75

8% (13%)
5%

(21%)
(16%)
(4%) 16%

(14%) 14%
Remain UtP

Remain UtP

56%
Remain UtP 50%
Remain UtP

UtP To Collected To Bad Loans Others From From non Other UtP To Collected To Bad Loans Others From From Other Other UtP
Exposure Performing Outflows Performing NPL Inflows Exposure Performing Outflows Performing NPL Inflows Exposure
31/12/15 31/12/16 31/12/17

In/Outflow
% flows =
Initial Exposure

Source: PwC analysis of banks’ financial statements as at 31/12/17 and 31/12/16.

PwC | 37
Our view on the available strategies for UtP

The strategic options identified through the on going due

diligence carried out by the bank on the borrower’s case
could result in the return of the loan to the performing
category through the implementation of internal
forbearance measures or via the sale of the loan or by the
classification of the exposure as Bad Loans (thus requiring
Key Message: Following improved proactive
the prompt liquidation of the borrower’s asset through
judicial procedures). management, banks could identify the most
effective and efficient solutions to deleverage
Sale of UtP could even be executed through portfolios their UtP (e.g. return to performing, collection)
transactions which require preliminary strategic among several strategic options. Solely a
segmentation to maximize loans’ value for the banks.
proactive management of UtP could lead to the
Alternatively, banks may decide to outsource the
management on NPE (such as UtP) to a specialised credit right “tailor made” strategic solution.
servicer.

• Forbearance measures
• New opportunities of value creation
- Grace period/Payment moratorium
• New market opportunities
- Extension of maturity/term
• Mandatory will be the transition from
- Debt consolidation ent
- New credit facilities agem Se
rvi Past Due management to a proactive
an management of the UtP (e.g. new credit
- Recovery plan by Italian Bankruptcy
cin
lM

facilities)
g

Law (e.g. art. 67 & 182 bis)

na

• Part of the industrial management

Inter

• Segmenting by industry/type of UtP

required by ECB
(overdue / restructured / defaulted) UtPs’ adding value • Best practices’ implementation
strategy
d ebtn/
e n e c ti o

• True sale/securitisation • Industrial partner to revampand

io r
f s y in j

• Single names’ sale on a best offer basis establish the underlying borrower’s
Lo

u
an

it

(opportunistic criteria) sa eq business (long term approach)

le o r’s g o
• Single names’ sale based on a structured t
I n v e s w r it i n • Financial partner to inject cash within a
r
plan (strategic criteria) unde strategic exit plan (short/medium term
• Sale of UtP portfolios approach)

38 | The Italian NPL market - What's next...?!

Forbearance as a relevant measure for the
proactive management of UtP

The ECB guidance emphasizes that the main objective

of forbearance measures is to allow debtors to exit their
non-performing status or to prevent performing borrowers
from reaching a non-performing status. Therefore, the
guidance actively addresses the theme, by guiding banks Key Message: Italian banks should improve
in the identification of the optimal balance of forbearance their loans’ restructuring procedures
measures aimed at granting the exit from short- and long-
throughout an appropriate and more effective
term difficulty status of the debtor. In particular, on the
basis of the type of difficulty of the debtor, either short- or “case by case” analysis of the financial
long-term forbearance measures (or a combination of the difficulty of the borrower.
two) maximizing recoveries shall be identified, by granting,
simultaneously, the sustainability of the adopted measures
(e.g. debt service capacity).

Main forbearance measures(1) – Application examples

Intervention
Adoption of short-term measures Adoption of long-term measures
area

• Temporary • Temporary
financial difficulty payment of • Excessively high
• Permanent reduction
of minor entity interest only interest rates for
Interest of interest rates
to be overcome (no capital the debtor
within 24 months reimbursement)

• Temporary financial • Temporary • Misalignment

• Rescheduling of
difficulty of reduction of between
amortization plan
moderate entity to instalment repayment plan
Instalments (e.g. partial, bullet,
be overcome within amount and reimbursement
step-up)
24 months • Full interest capacity of the
payment debtor

• Temporary
• “Grace period”
financial difficulty • Excessively high
for the payment • Extension of debt
of moderate/ instalments for the
Maturity of interests and maturity
serious entity to debtor
capital
be overcome within
24 mo.

• Voluntary disposal
of collateral by the
Collateral
debtor

= financial situation of the debtor = applicable forbearance measure

(1) In addition to debt forgiveness and/or arrears capitalisation options.

In particular cases it is possible to

adopt new credit facilities or debt
consolidation measures

PwC | 39
Servicing of UtP as a new market opportunity

Outsourcing the UtP is the next frontier of NPE servicing. The UtP servicing could increase significantly over the next
The specialized servicers must migrate from a traditional four years along with the volumes of NPE outsourced by
management of overdue UtP exposures to a proactive banks and investors to external specialised servicers.
management of UtP, thus entailing new lending and
restructuring measures as strategic management options.

Conditions to be satisfied by the Servicers for the

management of UtP

New lending – Through the on going

management of the existing loan contracts,
servicers must secure: 1) new injection
of cash (debt and/or equity) into the UtP
borrowers’ capital structure, directly (e.g.
challenger banks) or indirectly (through third
party investors) and 2) support in defining
restructuring plans.

Management – Servicers must carry on a

proactive management of the UtP borrowers
% of NPE stock outsourced
on a daily basis. Essential is the relationship
to specialists established with the borrowers and the
>40%
knowledge of their local market.
10-20%
2x UtP
20%

5-10%
UtP
IT Platform – Servicers must migrate the
UtPs management on advanced IT platform
2017 2021E aiming at promptly managing the relevant
Banks NPE management outsourcing information about the borrowers.

Strategies – Servicers must identify the

proper management strategy of the UtP
borrowers through the continuous assessment
of their performance, early warning
indicators, KPI.

40 | The Italian NPL market - What's next...?!

 Key Message: In 2017 UtP transactions, excluding the ones realised in context of banks’ bailouts,
have been limited in terms of amount and volumes. We believe that the market of UtP transactions
is starting in 2018.

Market transactions of UtP portfolios and single names in 2017

Seller Buyer € million

Veneto Banca, Banca

Popolare di Vicenza SGA 9,000

Banca Marche, Etruria, Quaestio Capital SGR

2,200 (¹)
Chieti + Credito Fondiario
Banks' bailouts
Quaestio Capital SGR
CRC – Carim – Carismi 2,800 (¹)
(mezzanine) + FIDT (junior)

Quaestio Capital SGR

Carife 376 (¹)
+ Credito Fondiario

CreVal Credito Fondiario 104

CRC – Carim – Carismi Algebris Investments 286

CreVal Algebris Investments 245 (²)

Commerzbank Fortress Inv. Group 234 (¹)

Other transactions CreVal Cerberus 105

Hypo Alpe Adria Bank S.p.A. Bain Capital Credit 750(1)

UniCredit S.p.A. Stinger SPV Srl 35

CreVal Hoist Finance 24

UniCredit S.p.A. DeVar Claims SPV Srl n.a.

(1) Mixed portfolio of UtP and Bad Loans.

(2) Transaction closed in Q1 2018.
PwC | 41
Investor’s equity injection/underwriting of
senior debt

The UtP market features structured transactions where Specialized players are introducing new solutions for the
specialized investors (distressed and turnaround) inject new banks to inject new finance in their borrowers and to reduce
equity or debt in distressed companies within a strategic exit their NPE Ratios.
plan in the short-medium run (speculative view) or in the
long run (industrial view).

Deal Structure Type of investor Derecognition for the bank

Buyout of single-named UtP aimed at

revamping the business throughout Private Equity Funds Banks can derecognise the loan
debt consolidation and proactive (distressed value investing in equity) through a true sale
management of target company

Acquirers of asset-backed securities

Synthetic securitisation of non- (including the banks originators Banks cannot derecognize the loan if
performing exposures, potentially underwriting the SPV notes) along they hold the credit risk through the
secured by GACS with investors with different risk junior notes of the SPV
profile

Acquisition of target company with

debtor-in-possession (DIP) financing Banks can derecognise the loan
Private Debt Funds investing in
to realise new investments. Often and replace it with shares of the
distressed companies
the investment vehicle / fund is investment vehicle/ fund
participated in selling banks

Creation of an all-equity SPV,

fully provided with cash; merger of
the SPV with target bank; use of SPV’s SPAC (Special Purpose Acquisition Banks can derecognise the loan
raised cash to underwrite senior debt/ Company) through a true sale
equity of distressed companies with
the purpose of business recovery

42 | The Italian NPL market - What's next...?!

The Servicing
Market
Executive Summary
The NPL servicing industry continues its positive
growth through the beginning of 2018 with
newcomers joining the market. We expect more
than €100 billion of disposals for the period 2018-
2021 driven by the increasing banks’ NPL platforms
sales. Increasing market and regulatory pressure
will also push banking groups to consider possible
strategic partnerships with NPL specialists.

PwC | 43
Key recent dynamics

The NPL servicing industry continues its positive growth • evolution of the business and regulatory model of NPL
through the beginning of 2018 based on outsourcing of servicers, mainly driven by UtPs that require different
recovery activities by Banks and continuous increase of skills and capabilities more similar to traditional banking
Banks’ portfolio disposals to investors. Market, competitive activities;
and regulatory dynamics that characterized 2017 and first
half of 2018 have driven the evolution of the servicing • value creation with strategic carve-out opportunities of
industry: NPL banking platforms: increasing market and regulatory
pressure will push banking groups to consider possible
• newcomers are joining the industry with big international strategic partnerships with NPL specialists;
investors entering the market. We have observed the
consolidation of big international players’ presence: first • a second wave of consolidation will be driven on one
of all Intrum/Lindorff, acquiring CAF at the end of 2017 hand by the new directive of the European Parliament
and the NPL platform of Intesa Sanpaolo in April 2018, on credit servicers that aims to harmonize the European
which will become the second operator by volumes in market facilitating cross-border scale-up activities, while
the Italian market after doBank; furthermore we should on the other hand by the pressure on margins that will
mention the partnership of Anacap with Pimco for the increase competitive pressures on DCAs;
acquisition of Phoenix; • decreasing market space for smaller independent NPL
• strategic outsourcing of NPL banking platforms is driving servicers, vertical integration between investors and
the growth of specialized NPL servicers. Following servicers and carve-out of NPL platforms are likely to
Creval, MPS, Bari, Carige and Intesa Sanpaolo deals, have a downward impact onmanaged volumes of players
other banking groups may consider partnerships for their not involved in these deals.
NPL platforms with the main market participants;
• strong evolution in business models reflected in new Is carve-out the best alternative?
market participants such as SGA and Spaxs. SGA, the
former “bad bank” of Banco di Napoli, owned by the The sale or outsourcing of NPL banking platforms appear to
Italian government is conceived as debt purchaser be on the headlines of Banks’ strategic initiatives. Following
but will also be involved in the credit management Creval, MPS, Bari, Carige and Intesa Sanpaolo deals, market
and collection activities, while Spaxs is an innovative rumours are emerging around possible further carve-out
initiative that aims to enter the market acquiring a set initiatives of Italian banking players.
of companies to participate actively in the UtP market
We consider it crucial to identify value creation drivers
providing financing for restructuring SMEs;
based on efficiency (recovery rates) and effectiveness (cost)
• regulation is shaping the market field: Calendar improvements.
Provisioning, IFRS9 and the EBA consultation Guidelines
In our view, three fundamental ingredients characterize
on how to manage NPL -which specifies a 5% threshold
a successful platform carve-out transaction, each of them
on NPL Ratio above which banks will be classified as
should be based on few strategic drivers:
“High NPL banks”- is pushing NPL disposals.
1. deal features: transaction structure, perimeter (stock,
forward flows) and Strategic Governance Model
Our outlook for 2018 / 2019 (including delegation of authorities) are crucial for the
success of the deal negotiation phase;
In our outlook for the following 12 months we see an 2. operating model: the definition of to-be IT platform and
additional increase of the share of the market managed by NPL transition model and of important operating functions
specialists in particular connected to the shift of Bad Loans is the necessary element for the launch of platform’
ownership from Banks to specialized investors. We expect more operations;
than €100 billion of disposals for the period 2018-2021 to be
driven by the increasing banks’ NPL platforms sales. 3. reporting and control model: data quality and KPI & SLA
establishment is decisive to maximize value extraction, in
the short and/or medium-long term, from workout units.
We expect the following dynamics to characterize sector
growth:
• the proactive management of Banks’ UtP portfolios
promoted by the ECB Guidelines, will increase the
disposal of these portfolios attracting a wider investor
base with subsequent outsourcing of servicing activities;

44 | The Italian NPL market - What's next...?!

Table 5: Main transactions in the servicing sector

2013

Italfondiario Cerved
Acquisition of a Acquisition of
minority stake Tarida, specialized
in BCC Gestione in consumer finance
crediti from collections vith 1.9bn
ICCREA AuM an
250k tickets

2014

Hoist Finance Banca Sistema Cerved

Acquisition of Acquisition of 2 Acquisition of
100% of TRC servicing platform 80% of Recus.
from private Candia & Sting from Specialized in
shareholders. private shareh and collection for telcos
Specialized in merger (CS Union) and utilities
consumer
finance

2015

Fortress Lonestar Cerved

Acquisition of Acquisition of Acquisition of 100% of
UniCredit captive CAF a servicing Fin. San Giacomo part
servicing platform platform with €7 bn of Credito Valtellinese
(UCCMB) AuM from private group
shareholders

2016

Cerved + BHW Axactor Lindorff Arrow Kruk doBank Dea Capital

Bausparkasse Acquisition of CS Acquisition of Acquisition of Acquisition of 100% of Acquisition of Acquisition of 66,3%
Long-term industrial Union from Banca CrossFactor, a small 100% of Zenith Credit Base 100% of of SPC
partnership for Sistema factoring and credit Service, a Italfondiario Credit Management
the management servicing platform master servicing
of 230 €m of NPL platform
originated by the
Italian branch of BHV
Bausparkassen AG

2017
Kkr Lindorff Bain Capital Varde Cerved + BHW Davidson Cerved + Quaestio
Acquisition of Acquisition of Acquisition of Acquisition of Bausparkasse Kempner Acquisition of the
Sistemia Gextra, a small 100% of HARIT, 33% of Guber Long-term industrial Acquisition of credit servicing
ticket player from servicing platform partnership extension 44.9% of Prelios platform (a.k.a.
doBank specialized in for the management and launch of “Juliet”) of MPS
secured loans of a portfolio of a mandatory
loans of 1.5 €bn tender offer
originated by the
Italian branch of BHV
Bausparkassen AG

Cerved Intrum/ Lindorff Credito Fondiario

Acquisition of a NPL Acquisition of 100% Acquisition of NPL
platform of Banca of CAF servicing platform of
Popolare di Bari Carige

H1 2018
Arrow IBL Banca + Europa Anacap + Pimco Intesa + Kruk Banca IFIS
Acquisition of 100% Factor Acquisition of a Lindorff / Acquisition of 51% of Acquisition of
of Parr Credit and Joint venture for majority stake Intrum Agecredit 90% of FBS
Europa Investimenti the creation of the in Phoenix Asset Joint venture (Subject to the
new Servicer Credit Management for the NPL approval of the
Factor: 106 vehicle platform of regulator)
(subject to Bankit Intesa Sanpaolo
authorization)

PwC | 45
Table 6: Overview of main servicers (data at 31/12/2017) – Ranking by Revenues

Special Servicing Servicing

Bank of Italy Revenues Master Servicing Ebitda
Company Total Bad Loans1 Other NPL AuM2 Performing AuM
Surveillance (€ million) AuM (€ billion)11 (€ million)
AuM (€ billion) (€ billion) (€ billion)

doBank3 Bank 213.0 74.3 1.5 0.9 44.9 70.1

Cerved Credit Management 106 94.8 34.9 1.4 9.5 27.6
MBCredit Solutions 106 70.312 5.5 - - 28.712
Credito Fondiario Bank 41.6 6.34 1.34 1.44 42.54 n.a.
Fire 115 40.3 3.2 4.0 9.0 1.1
Advancing Trade 106/115 35.0 3.1 0.9 1.0 10.05
Guber Bank 30.9 7.9 - - n.a.
Cribis Credit Management 115 25.2 2.1 12.9 7.6 n.a.
CAF (Intrum Italy) 115 22.7 8.2 - 0.2 8.9
Serfin 115 22.0 0.5 0.3 0.7 n.a.
Hoist Italia 115 21.3 6.8 - - n.a.
Securitisation Services 106 20.7 0.6 1.0 2.5 37.4 11.4
FBS 106 20.4 8.0 - - 10.1
Sistemia 115 20.3 6.5 - - 5.5
Europa Factor 106/115 20.1 2.6 - 0.5 2.5
Parr Credit (Arrow Group) 115 17.6 0.5 0.4 - 1.0
Gruppo Frascino7 115 15.0 2.1 - 0.2 4.8
Officine CST 115 14.6 1.7 - 1.4 5.4
Bcc Gestione Crediti 115 14.4 4.0 - - 3.8
Prelios Credit Servicing 106 13.5 4.6 - - 6.4 0.5
Aquileia Capital 106/115 13.5 1.3 0.2 - n.a.
Frontis NPL 115 12.4 2.5 0.3 - 9.8
Fides 115 12.0 1.1 0.2 0.2 n.a.
Axactor Italy 106 9.2 1.0 0.3 - n.a.
AZ Holding 115 8.5 1.9 - - n.a.
CSS 115 7.5 2.2 0.4 - 0.6
Finint Revalue 115 6.9 2.8 0.6 - n.a.
SiCollection 115 6.4 1.0 - - 0.7
Phoenix Asset Management 115 6.0 8.9 - - 2.9
Link Financial 115 4.6 2.2 0.1 - n.a.
Aurora RE 115 4.2 0.2 0.7 0.2 n.a.
Centotrenta Servicing 106 4.2 - - - 8.1 1.1
Gextra (Intrum Italy) 115 3.6 0.5 0.1 - 0.3
Certa Credita 115 2.9 0.2 - 0.1 0.59
Blue Factor 106 2.0 1.6 - - 0.7
Bayview Italia 115 -10 3.6 - - n.a.
Zenith Service (Arrow Group) 106 -10 - 0.8 8.4 25.6 n.a.

Source: PwC analysis on data provided by Servicers as of 31/12/2017; data have been directly provided by Servicers and have not been verified by PwC. Servicers present
highly heterogeneous organizational, industrial and operating structures. Comparing the information presented above requires a correct analysis and understanding of the
competitive landscape and servicers business model.
1 Includes both owned and third parties portfolios.
2 Includes Unlikely to Pay + Past Due more than 90 days.
3 doBank group figures include Italfondiario.
4 AuM at 31/05/2018.
5 EBITDA Adjusted.
6 Debt purchasing activities are conduced via Special Purpose Vehicles.

46 | The Italian NPL market - What's next...?!

 Main activities
Rating
NPL servicing Debt Collection Debt purchasing Master servicing

a a a

a a a

a a a

a a a a

a a a a

a a a

a a a

a a

a a a6

a a a a

a a a

a a a

a a a

a8

a a

a a a

a a6

a a

a a

a a

a a

a a

a a

a a

a a

a a a

7 Includes Credit Network Finance and Z1s.

8 Officine CST is specialised mainly in PA credit servicing.
9 EBITDA refers to 2016.
10 2017 data have not been provided by Servicers, at 31/12/2016 revenues were equal to: Zenith Service 12€m; Not available data for Bayview.
11 Master Servicing services can be qualified in order to provide an advanced KPIs monitoring activity, which uses powerful algorithms, performance trend analysis and the best
recovery strategies ("Special Servicing Oversight").
12 Revenues and EBITDA normalized at 31/12/2017.
Note: Double counting may arise when adding NPL AuM as some servicers outsource part of their portfolios to others due to capacity and/or specialization issues.

PwC | 47
Table 7: Breakdown of servicers’ Total Bad Loans AuM1 (data at 31/12/2017) – Ranking by Revenues

Revenues Total Bad Loans Average

Company Secured2 (%) Unsecured2 (%)
YE 2017 (€ million) AuM (€ billion)1 Ticket (€k)

doBank3 213.0 74.3 115 79% 21%

Cerved Credit Management 94.8 34.9 88 49% 51%
MBCredit Solutions 70.3 7
5.5 3 3% 97%
Credito Fondiario 41.6 6.3 4
38 4
55% 45%
Fire 40.3 3.2 5 11% 89%
Advancing Trade 35.0 3.1 6 100%
Guber 30.9 7.9 63 17% 83%
Cribis CM 25.2 2.1 18 62% 38%
CAF (Intrum Italy) 22.7 8.2 31 34% 66%
Serfin 22.0 0.5 1 100%
Hoist Italia 21.3 6.8 10 1% 99%
Securitisation Services 20.7 0.6 13 18% 82%
FBS 20.4 8.0 32 23% 77%
Sistemia 20.3 6.5 22 76% 24%

Europa Factor 20.1 2.6 1 14% 86%

Parr Credit (Arrow Group) 17.6 0.5 2 100%

Gruppo Frascino5 15.0 2.1 14 10% 90%

Officine CST 14.6 1.7 13 52% 48%

Bcc Gestione Crediti 14.4 4.0 124 71% 29%

Prelios Credit Servicing 13.5 4.6 310 57% 43%
Aquileia Capital 13.5 1.3 330 86% 14%

Frontis NPL 12.4 2.5 1,089 92% 8%

Fides 12.0 1.1 6 100%

Axactor Italy 9.2 1.0 7 1% 99%

AZ Holding 8.5 1.9 7 5% 95%

CSS 7.5 2.2 6 100%

Finint Revalue 6.9 2.8 11 81% 19%

SiCollection 6.4 1.0 6 1% 99%

Phoenix Asset Management 6.0 8.9 344 35% 65%

Link Financial 4.6 2.2 6 12% 88%

Aurora RE 4.2 0.2 25,620 100%

Centotrenta Servicing 4.2 - 5 n.a. n.a.

Gextra (Intrum Italy) 3.6 0.5 7 5% 95%

Certa Credita 2.9 0.2 6 100%

Blue Factor 2.0 1.6 8 100%

Bayview Italia -6 3.6 59 43% 57%

Zenith Service (Arrow Group) -6 - 10 n.a. n.a.

Source: PwC analysis on data provided by Servicers as of 31/12/2017; data have been directly provided by Servicers and have not been verified by PwC. Servicers present
highly heterogeneous organizational, industrial and operating structures. Comparing the information presented above requires a correct analysis and understanding of the
competitive landscape and servicers business model.
1 Includes both owned and third parties portfolios.
2 Percentages are based on total NPL portfolio: breakdown for Master and Special servicing activities have not been provided.

48 | The Italian NPL market - What's next...?!

 Owned 2 (%) Banks2 (%) Investors2 (%) Others2 (%)

36% 64%
63% 37%
77% 8% 6% 9%
10% 17% 74%
6% 58% 37%
27% 18% 55%
17% 35% 46% 1%
77% 23%

37% 63%
n.a. n.a. n.a. n.a.

100%
17% 83%

13% 30% 58%

59% 35% 6%

55% 14% 5% 26%

4% 58% 38%

1% 1% 98%

46% 36% 18%

43% 57%
13% 87%

33% 21% 40% 6%

1% 99%
48% 52%

100%
7% 58% 23% 11%
11% 89%

27% 64% 8%
15% 1% 64% 20%
100%

100%
80% 20%

n.a. n.a. n.a. n.a.

76% 24%
64% 36%
25% 75%

100%
n.a. n.a. n.a. n.a.

3 doBank group figures include Italfondiario – Secured AuM: 30% if referred only to “first lien” secured Bad loans.
4 AuM at 31/05/2018.
5 Includes Credit Network Finance and Z1s.
6 2017 data have not been provided by Servicers, at 31/12/2016 revenues were equal to: Zenith Service 12€m; Not available data for Bayview.
7 Revenues normalized at 31/12/2017.

PwC | 49
Table 8: Geographical NPL breakdown (data at 31/12/2017) – Ranking by Revenues

In term of AuM

Revenues Total Bad Loans

Company North2 Centre3 South - Islands4
YE 2017 (€m) AuM (€ billion)1

doBank5 213.0 74.3 45% 23% 32%

Cerved Credit Management 94.8 34.9 35% 23% 42%

MBCredit Solutions 70.3 10
5.5 39% 23% 38%

Credito Fondiario 41.6 6.3 6 53%7 33% 15%

Fire 40.3 3.2 34% 22% 44%

Advancing Trade 35.0 3.1 36% 16% 48%

Guber 30.9 7.9 42% 40% 18%
Cribis Credit Management 25.2 2.1 47% 25% 28%
CAF (Intrum Italy) 22.7 8.2 49% 31% 20%

Serfin 22.0 0.5 30% 50% 20%

Hoist Italia 21.3 6.8 47% 19% 33%

Securitisation Services 20.7 0.6 40% 27% 33%

FBS 20.4 8.0 27% 38% 36%
Sistemia 20.3 6.5 48% 35% 17%
Europa Factor 20.1 2.6 28% 26% 46%

Parr Credit (Arrow Group) 17.6 0.5 37% 25% 38%

Gruppo Frascino 8
15.0 2.1 38% 24% 38%

Officine CST 14.6 1.7 35% 21% 43%

Bcc Gestione Crediti 14.4 4.0 52% 22% 26%

Prelios Credit Servicing 13.5 4.6 25% 22% 53%
Aquileia Capital 13.5 1.3 99% 1%
Frontis NPL 12.4 2.5 63% 26% 10%
Fides 12.0 1.1 14% 14% 72%
Axactor Italy 9.2 1.0 n.a. n.a. n.a.
AZ Holding 8.5 1.9 33% 34% 33%
CSS 7.5 2.2 51% 17% 32%

Finint Revalue 6.9 2.8 33% 42% 25%

SiCollection 6.4 1.0 41% 16% 43%
Phoenix Asset Management 6.0 8.9 21% 59% 21%
Link Financial 4.6 2.2 21% 36% 43%
Aurora RE 4.2 0.2 48% 46% 6%
Centotrenta Servicing 4.2 - 44% 31% 25%
Gextra (Intrum Italy) 3.6 0.5 44% 23% 34%
Certa Credita 2.9 0.2 28% 17% 55%
Blue Factor 2.0 1.6 33% 31% 36%
Bayview Italia -9 3.6 53% 28% 19%
Zenith Service (Arrow Group) -9 - 54% 20% 27%

Source: PwC analysis on data provided by Servicers as of 31/12/2017; data have been directly provided by Servicers and have not been verified by PwC; Servicers present
highly heterogeneous organizational, industrial and operating structures. Comparing the information presented above requires a correct analysis and understanding of the
competitive landscape and servicers business model.
1 Includes both owned and third parties portfolios.
2 Includes: Piemonte, Valle d’Aosta, Lombardia, Veneto, Trentino Alto Adige, Friuli Venezia Giulia, Liguria, Emilia Romagna.
3 Includes: Toscana, Umbria, Marche, Lazio.

50 | The Italian NPL market - What's next...?!

 Table 9: Breakdown of servicers’ Total Bad Loans AuM1 (data at 31/12/2017) – Ranking by Revenues

Type of loan resolution - Nr of Loans

Secured Unsecured
Judicial Extrajudicial Loan Sale Judicial Extrajudicial Loan Sale

14% 85% 1% 2% 98%

19% 58% 22% 6% 94%

69% 31% 21% 79%
38% 62% 2% 98%
48% 52% 10% 90%
n.a n.a n.a 1% 3% 96%
69% 31% 13% 87%
43% 46% 11% 17% 83%
38% 27% 35% 11% 49% 40%
n.a n.a n.a 10% 90%
76% 24% 28% 72%
n.a n.a n.a n.a n.a n.a
23% 66% 11% 10% 80% 10%
70% 30% 50% 50%
n.a n.a n.a 4% 30% 66%
100% 100%
30% 23% 47% 27% 48% 25%
79% 20% 1% 29% 70% 1%
9% 91% 1% 15% 85%
67% 25% 8% 35% 32% 33%
13% 87% 5% 95%
50% 35% 15% 2% 23% 75% 35%
1% 99% 100%
n.a n.a n.a n.a n.a n.a

23% 77% 30% 70%

100% 100%
63% 37% 15% 85%
n.a n.a n.a 6% 94%
50% 45% 5% 30% 50% 10%
91% 9% 3% 97%
n.a n.a n.a n.a n.a n.a
n.a n.a n.a n.a n.a n.a
4% 96% 1% 99%
n.a n.a n.a 100%
n.a n.a n.a 40% 60%
n.a n.a n.a n.a n.a n.a
n.a n.a n.a n.a n.a n.a

4 Includes: Abruzzo, Molise, Campania, Puglia, Basilicata, Calabria, Sicilia, Sardegna.

5 doBank group figures include Italfondiario
6 AuM at 31/05/2018.
7 North includes n.a.
8 Includes Credit Network Finance and Z1s.
9 2017 data have not been provided by Servicers, at 31/12/2016 revenues were equal to: Zenith Service 12€m; Not available data for Bayview.
10 Revenues normalized at 31/12/2017.

PwC | 51
Recent
market
activity and Key Message: The Italian banking sector is
demonstrating higher willingness to actively

outlook manage the amount of Non Performing Loans

present on banks’ balance sheets and to promote
credit recovery. The latest NPL disposals and
the recent regulatory changes confirm that the
general attitude tends to reduce the weight of
Italian deteriorated loans and to restore higher
performance levels for Italian banks. Transaction
volumes in 2018 are expected to peak €70 billion.

52 | The Italian NPL market - What's next...?!

Compared to what has been done in previous years, Italian The new accounting rules set out by the IFRS 9, which
banks are now carrying out larger NPL sales and write-downs, replaces IAS 39 for the recognition of financial instruments
looking for buyers for their deteriorated loans and managing and has come into force from January 1st, 2018, will require
NPL portfolios in a more proactive way. Italian banks to consider expected losses on their loan
books as well as realized losses. The migration from the old
For example, among the most relevant and recent events approach will therefore produce substantial effects on banks’
which have characterized the Italian NPL market, the last two balance sheets, in particular with reference to the First Time
quarters of 2017 registered the disposals of the Adoption (FTA) fiscal year.
€1.2 billion Bad Loans portfolio of Banca Carige, the €320
million one of Banca Popolare di Bari and the €885 million Moreover, the ECB Addendum to its guidelines to banks on
one of Cassa Centrale Banca. Non Performing Exposures (which requires write-downs
on NPL for 100% of their book value, to be realized in 7
years from their transition to the non performing state for
secured loans, 2 years for unsecured ones) could make it less
convenient for Italian banks to extend the permanence of
NPL on their balance sheets and this is likely to reinforce the
power of their NPL disposal policies.

Table 10: Closed NPL transactions in 2018 YTD

Volume 2018 Performing/Non

Date Seller Macro asset class Buyer
(€ million) Performing
2018 Q2 UniCredit S.p.A. 140 Non Performing Unsecured MBCredit Solutions S.p.A.
2018 Q2 Alba Leasing 100 Bad Loans Secured Bain Capital
2018 Q2 Banca MPS S.p.A. 24,100 Bad Loans Mixed secured/unsecured Quaestio Capital SGR S.p.A.
2018 Q2 Findomestic Banca S.p.A. 35 Non Performing Unsecured Banca IFIS S.p.A.
2018 Q2 Banca IFIS S.p.A. 40 Non Performing Unsecured Pinkerton SPV Srl
2018 Q2 Sicilcassa S.p.A. 1,700 Non Performing Secured MB Finance S.r.l.
2018 Q2 Intesa San Paolo 10,800 Non Performing Mixed secured/unsecured Intrum
2018 Q2 UniCredit S.p.A. 38 Non Performing Secured Due Securitisation SPV S.r.l.
2018 Q2 Agos Ducato S.p.A. 30 Non Performing Unsecured Hoist Finance
2018 Q2 Creval 245 Bad Loans & UtP Secured Algebris Investments
2018 Q1 Confidential 55 Non Performing Secured IDea NPLs
2018 Q1 TI SPV S.r.l. 38 Non Performing Mixed secured/unsecured At NPL's S.p.A.
2018 Q1 Banca Valsabbina Scpa 15 Non Performing Mixed secured/unsecured Sole SPV S.r.l.
2018 Q1 Banca Popolare di Bari 82 Consumer Loans Consumer ViViBanca

Chart 34: NPL transactions trend in the Italian market (€ billion)

64
0.8
0.0

37
0.0
30

19 9.3
35.0
1.2
1.2
9 5.4
7.5
4 3.0
5 0.6
0.8
1.5
2.6 3.7 7.4 9.7
0.2 1.8 0.2
2.1 6.5
2.6 3.8 4.4 4.0 1.2 2.1 0.1
2012 2013 2014 2015 2016 2017 2018 YTD

Consumer Unsecured Secured Mixed Secured/Usecured Mainly Unsecured Other Total GBV

Source: PwC market analysis.

PwC | 53
As displayed in Chart 34, the first five months of 2018 More NPL transactions are expected for the remaining part of
feature €37.4 billion of closed transactions, including the the year (the main ongoing disposal operations announced
€24.1 billion Bad Loan securitization completed by Monte for 2018 are displayed in the table below): the efforts to
dei Paschi di Siena Group and the €10.8 billion sale of Non reduce the NPL burden and to accelerate the recovery are a
Performing Loans (both secured and unsecured) by Intesa 2018 strategic priority for Italian banks.
San Paolo to Intrum.
Table 11: Announced NPL transactions for 2018

Seller Volume (€ million) Portfolio type Macro asset class Project name
UBI Banca 3,000 / 4,000 NPL securitisation Mainly secured -
Multioriginator 1,700 NPL securitisation Mainly secured Project Multioriginator
ICCREA 1,000 NPL securitisation Mainly secured -
Creval 1,600 NPL securitisation Mainly secured -
Banco Desio 1,110 NPL securitisation Mainly secured -
Credit Agricole 6,000 Bad Loans Unsecured Project Poppy
Banco BPM 5,100 NPL securitisation Mainly secured Project Exodus
Banca di Sassari 1,100 NPL securitisation Mainly secured Project Banca di Sassari
BPER 2,900 NPL securitisation Mainly secured Project BPER
Gruppo Delta 2,200 Bad loans Unsecured Project Arcade
Cariparma 435 UtP Secured Project Valery
Carige 1,400 UtP Secured Project Isabella
Carige 500 UtP Secured Project Carige

54 | The Italian NPL market - What's next...?!

 61.8 18.7 49.0
62.2 20.4 53.9

YE 2013
YE 2013
YE 2013
61.0 20.8 53.2

UCG
UCG
UCG
73.3 13.6 51.0
66.2 9.7 28.6

62.5 13.0

YE 2014
YE 2014
34.6

YE 2014
62.8 14.2 38.2
61.8 15.0

ISP
ISP
39.2

ISP
60.7 14.9 37.9
63.1 12.6
34.2

YE 2015
YE 2015
YE 2015
21.6
58.8 8.9 21.6

Bad Loans Coverage Ratio (%)

65.3 8.4

Net Bad Loans volume (€ billion)

24.3
63.4 9.7

MPS

MPS
26.6
Gross Bad Loans volume (€ billion)

MPS
64.8 10.4

YE 2016

YE 2016
29.4

YE 2016
77.2 7.5
33.0
41.9 6.7
11.5
45.9 7.3

YE 2017

YE 2017
7.9 13.6
42.2

YE 2017
67.3 6.2 13.8

Banco BPM
19.1

Banco BPM
53.8 6.5

Banco BPM
14.0
41.6 3.4
38.8 4.0 5.9
38.6 4.3 6.6

UBI

UBI
45.1 4.0 7.0
UBI

Source: Financial Statements as of YE-2017, YE-2016, YE-2015, YE-2014, YE-2013.

44.8 4.1 7.3
7.3
59.1 2.4
62.0 2.7 5.8
63.3 3.0 7.1

BNL

BNL
64.6 3.2 8.1
BNL

59.7 3.1 8.9

7.7
55.0 2.5
56.5 2.8 5.5
58.2 3.0 6.5

BPER

BPER
57.2 3.0 7.1
BPER

59.3 2.9 7.0

7.1
55.0 1.0
56.5 1.1 2.2
57.6 1.2 2.6
57.9 1.2 2.7

Cariparma

Cariparma
59.5 1.2 2.9
Cariparma

3.0
60.9 0.5
61.1 0.6 1.2
61.9 0.7 1.6
63.4 0.8 1.9
Pop. Sondrio

Pop. Sondrio
66.1 0.8 2.1
Pop. Sondrio

2.3
58.2 0.3
58.6 0.3
0.7
60.8 0.4
0.8
Credem

Credem
59.6 0.3
0.9
61.1 0.3
Credem

0.9
0.8

PwC | 55
 85.5 3.7 8.9
87.2 4.3 10.4

YE 2013

YE 2013

YE 2013
4.4 10.3

UCG
82.9

UCG

UCG
77.1 3.0 10.3
50.3 2.2 6.0

3.8 9.3

YE 2014

YE 2014
57.6

YE 2014
63.0 4.2 10.3
4.3 10.3

ISP
63.4

ISP

ISP
4.1 9.6
58.4

Net Bad Loans Ratio (%)

3.1 7.8
52.7

YE 2015

YE 2015
Gross Bad Loans Ratio (%)

YE 2015
Gross NPE volume (€ billion)
6.8 14.7
36.1
7.1 17.0
45.3
8.7 19.8

MPS

MPS
46.9

MPS
22.1

YE 2016
9.7

YE 2016
45.8

YE 2016

56 | The Italian NPL market - What's next...?!

8.3 27.0
45.1

5.6 9.0
11.5
6.6 11.1
13.6

YE 2017

YE 2017

YE 2017
7.1 11.3
26.8
5.6 15.8
30.7

Banco BPM

Banco BPM
6.0 11.9

Banco BPM
23.1

3.9 6.4
12.7
4.7 7.3
13.1
5.1 7.9
UBI

13.5

UBI

UBI
4.9 8.4

Source: Financial Statements as of YE-2017, YE-2016, YE-2015, YE-2014, YE-2013.

12.5
4.4 7.6
12.7

3.7 8.4
11.0
4.4 10.4
12.3
4.9 12.0
BNL

BNL
12.9

BNL
5.1 13.0
13.1 11.5
5.1
11.3

5.3 10.9
10.3 13.3
6.4
11.0 14.5
6.8
BPER

11.4

BPER
13.9

BPER
6.6
11.2 13.4
6.1
10.5

2.7 5.6
3.9 6.7
3.1
5.0 7.1
3.2
5.2 7.2
3.2
Cariparma

Cariparma
5.0

Cariparma
2.7 6.3
5.1
1.9 4.7
3.0 6.1
2.4
3.6 7.4
3.1
4.3 7.6
3.0
4.4
Pop. Sondrio

Pop. Sondrio

3.0 8.2

Pop. Sondrio
4.2

1.6 3.6
1.3
1.5 3.6
1.3
1.5 3.8
1.4
Credem

Credem

1.5 3.5

Credem
1.4
1.3 3.2
1.3
 15.6 51.9 41.1
16.9 51.1 42.6

YE 2013

YE 2013

YE 2013
16.0 51.1 40.5

UCG

UCG

UCG
15.6 62.8 28.7
10.5 56.1 22.0

46.0 31.1

YE 2014

YE 2014
15.4

YE 2014
17.0 46.7 33.6

Gross NPE Ratio (%)

16.6 47.5 33.3

ISP

ISP

ISP
14.8 48.7 30.0

NPE Coverage Ratio (%)

50.7 26.0
Net NPE volume (€ billion)

12.0

YE 2015

YE 2015

YE 2015
24.5 41.8 21.0
31.7 48.9 23.1
48.5 24.2

MPS

MPS
34.8

MPS
55.6 20.3

YE 2016

YE 2016
34.5

YE 2016
37.0 67.2 14.8

9.0 41.9 6.7

11.1 45.9 7.3

YE 2017

YE 2017

YE 2017
21.9 33.6 17.8
25.4 59.1 12.6

Banco BPM
Banco BPM

Banco BPM
19.5 43.3 13.1

13.7 26.5 9.3

14.6 27.3 9.5
15.2 27.8 9.7
UBI

UBI

UBI
35.7 8.1

Source: Financial Statements as of YE-2017, YE-2016, YE-2015, YE-2014, YE-2013.

14.5
13.0 35.4 8.2

15.9 43.7 6.2

18.0 48.1 6.4
51.5 6.3
BNL

BNL
19.2

BNL
55.3 5.8
19.0
52.0 5.4
16.8

37.3 6.4
20.3
40.7 6.5
22.6
44.2 6.4
23.3
BPER

BPER
44.5 6.2

BPER
22.1
48.7 5.4
19.8
39.6 2.3
10.2
38.6 3.0
12.6
40.5 3.1
13.3
42.2 2.9
Cariparma

Cariparma
12.4

Cariparma
44.9 2.8
10.8
39.2 1.8
12.0 43.2 2.1
14.2 44.5 2.4
16.3 46.2 2.4
Pop. Sondrio

16.1
Pop. Sondrio
51.0 2.1

Pop. Sondrio
15.1
38.7 0.8
6.3 40.7 0.8
6.0 44.6 0.8
Credem

6.0
Credem

42.5 0.8

Credem
5.8 45.1 0.7
5.2

PwC | 57
 40.1 114.3 8.2
41.3 34.6 9.1

YE 2013

YE 2013
YE 2013
8.5

UCG
42.0 35.0

UCG
UCG
34.6 115.7 6.4
16.3 20.3 4.9

9.0

YE 2014
Net NPE Ratio (%)
29.1 68.9

YE 2014
YE 2014
31.9 41.8 9.9
31.3 9.5

ISP
29.8

ISP
ISP
30.5 35.1 8.2
6.3

Net Bad Loans/Equity (%)

22.5 31.9

YE 2015

YE 2015
YE 2015
144.5 129.4 16.0
141.6 366.5 19.3
21.7

MPS
101.4 89.3

MPS
MPS
19.0

YE 2016
161.3 223.1

YE 2016
YE 2016

58 | The Italian NPL market - What's next...?!

72.2 299.8 16.3

56.4 89.9 5.6

58.3 164.9 6.6

YE 2017

YE 2017
YE 2017
62.6 51.3 15.8
82.4 185.2 11.4

Banco BPM

Banco BPM
Banco BPM
54.5 65.8 12.1

Yearly Loan Loss Provision/Net Interest Margin (%)

33.2 53.9 10.5
41.1 51.1 11.1
43.0 49.2 11.5
UBI

UBI
UBI
9.9

Source: Financial Statements as of YE-2017, YE-2016, YE-2015, YE-2014, YE-2013.

44.4 104.4
40.9 44.1 8.9

42.4 54.3 9.7

48.6 59.5 10.3
52.4 49.7 10.4
BNL

BNL
BNL
56.2 41.7 9.5
55.6 46.1 8.8

61.0 60.6 13.9

69.9 62.9 14.9
59.2 57.5 14.5
BPER

BPER
BPER
59.9 52.9 13.6
57.1 47.7 11.3

21.0 52.9 6.4

23.9 41.5 8.2
23.5 33.1 8.4
24.2 70.0 7.6
Cariparma

Cariparma
Cariparma
19.6 63.9 6.3

23.8 83.0 7.7

25.5 78.5 8.1
28.7 71.8 9.8
29.8 52.7 9.4
Pop. Sondrio

Pop. Sondrio
Pop. Sondrio

29.1 47.3 8.0

14.4 22.9 4.0

14.1 21.0 3.7
14.4 23.5 3.4

Credem
Credem

Credem

14.0 15.8 3.4

12.0 14.9 2.9
Contacts List / Contributors

Pier Paolo Masenza Fedele Pascuzzi

Financial Services Deals Leader Business Recovery Services Leader
[email protected] [email protected]

Vito Ruscigno Alessandro Biondi

Co-Head of NPL Co-Head of NPL
[email protected] [email protected]

Gianluigi Benetti Gabriele Guggiola

Financial Services | Deals Strategy Leader Regulatory Deals Leader
[email protected] [email protected]

Antonio Martino Emanuele Egidio

Real Estate Deals Leader Associate Partner (Challenger Banks)
[email protected] [email protected]

Matteo D'Alessio Edoardo Costa

Financial Services Deals Partner Director
[email protected] [email protected]

Francesco Cataldi
Director
[email protected]

PwC | 59
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60 | The Italian NPL market - What's next...?!

PwC | 61
62 | The Italian NPL market - What's next...?!
PwC | 63
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