Eurocastle Investment Limited, a publicly traded closed-end investment firm with a focus on investing in performing and non-performing loans and other real estate related assets in Italy, announced on Thursday the 15th of December that they intent to buy a substantial part of the Non Performing Loan (NPL) portfolio of the troubled Italian bank UniCredit. The Gross Book Value (GBV) of the take over is estimated at € 17.7 Billion.
Since May 2013, Eurocastle has invested approximately € 351 Million in Italian investments, which include doBank (UniCredit’s former “bad bank”), pools of performing and non-performing loans with a GBV of € 9.7 billion as well as opportunistic investments in Italian Real Estate Fund units.
The Company, that is listed on Euronext Amsterdam Exchange, expects to invest between 50 and 70 Million Euro, depending on the potential upside of the loan portfolio.
UniCredit, one of the largest banks in Italy, announced earlier this week to make 6.500 workplaces redundant over a period of the coming three years. Jean-Pierre Mustier, the first non-Italian CEO of the bank, anticipates to create stability after years of relapse. The fair value of the bank dropped between 2015 and 2016 from 40 Billion to 13 Billion Euro. Mustier aims to achieve a stable profitability of 5 Billion Euro from 2019 onwards. Short term measures should reduce yearly costs with 1,7 Billion Euro.
The Italian banking sector is in turmoil for a few years already. Another bank, Monte dei Paschi di Siena is experiencing difficulties for quite some time as well. The Italian government plans a rescue if the planned private bailout fails. UniCredit therewith is not the only Italian bank in dire straits.