May 27, 2019

EC approved, under the EU State aid rules, the extension of Italian guarantee scheme on securitization of non-performing loans, NPLs (Fondo di Garanzia sulla Cartolarizzazione delle Sofferenze—GACS). Under the scheme, Italian banks meeting certain conditions will not be able to provide a guarantee of a higher rate of return. The more risky funding tranches of the securitization vehicles are likely to be sold to private investors and will not be guaranteed by the State. This authorization is granted until May 27, 2021.

The concept was originally approved in February 2016 and last prolonged in August 2018. By assisting banks to securitize and move NPLs on their balance sheet, the scheme is an important component of the strategy of Italy to tackle asset quality problems of banks and has already made a significant contribution. Between February 2016 and November 2018, the scheme has been accessed seventeen times, removing EUR 51 billion (gross book value) of NPLs from the Italian banking system, which corresponds to almost two-third of the total reduction of NPLs in Italy during the period. EC has made this assessment in accordance with the terms of reference, the State guarantees and the conditions of the market, and the conditions for taking them into account. 

 

Related Link: Notification

 

Keywords: Europe, Italy, EU, NPLs, State Aid Rules, Securitization, Guarantee Scheme, EC

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