Mediobanca said it has agreed to sell its bad loan acquisition unit for 100 million euros ($110 million), as Italy’s leading investment bank focuses on capital-light businesses ahead of unveiling a new three-year strategy.
Banca IFIS agreed to buy Revalea, a unit Mediobanca set up last year by separating purchasing from the management of bad debts. Mediobanca will continue to operate the latter through its MBCredit Solutions unit.
It was the second deal announced by Mediobanca in days as it prepares to present a new business plan through 2026 on Wednesday.
Last week’s acquisition of tech advisory firm Arma Partners and Monday’s sale of Revalea both fit with a goal of investing in businesses that require less capital to be deployed against such operations.
“This agreement is consistent with our intention to increase exposure to capital-lighter and higher fee-generating businesses, in accordance with our customary prudent approach to risk taking and management,” Mediobanca CEO Alberto Nagel said.
Revalea, with a staff of 22, holds 6.8 billion euros in unsecured bad loans, which have a net book value (NBV) of 256 million euros.
Mediobanca did not disclose the impact on earnings which is negative, given a selling price below the NBV. However, by freeing the bank of bad loans, the deal will add around 10 basis points to core capital, it said.
Under a newly signed partnership, MBCredit Solutions will work on recovering bad debts on IFIS’ behalf as well.
IFIS and Mediobanca have also signed an accord over future flows of impaired loans from Mediobanca’s consumer credit arm, Compass.
The acquisition will allow IFIS to achieve a bad loan purchase target of 30 billion euros in gross terms and 1.8 billion net set out under its 2022-2024 plan.
The deal, which should close by the end of the year, will have a negative 40 basis point impact on its core capital.
Source: Reuters.com