The EU Commission has extended the Italian public guarantee scheme to facilitate the securitization of banks’ non-performing loans (Gacs) (see the press release here). The scheme was approved in February 2016 and last extended in 2018. It will now be valid until May 27, 2021.
The Commission recalls that between February 2016 and November 2018 the scheme was used 17 times, allowing to remove 51 billion euros of NPLs from the books of Italian banks (see here the BeBeez Report Npl May 2019 and here the BeBeez Report Npl 2018).
The green light arrives after publication in the Official Journal on May 24, 2019 of the law May 20, 2019, n. 41, of conversion into law, with amendments, of the decree-law 25 March 2019, n. 22, which contains measures aimed at guaranteeing safety and stability in the case of Great Britain leaving the European Union without an agreement (so-called Hard Brexit). The Italian Chamber of Deputees had finally approvedon May 14th the bill of conversion of the decree that also contained the renewal measures of the Gacs (see here the press release by the Chamber of Deputees and here a previous post by BeBeez).
The innovations contained in the decree and therefore in the law with respect to the previous Gacs discipline are the followings:
- the guarantee scheme will last 24 months from the positive EU opinion, extendable for a further 12 months, instead of the 18 months originally envisaged in 2016;
- the transfer price of securitized non-performing loans is no longer computed at the time of the sale;
- the minimum rating of the eligible credits for the state guarantee is higher than the previous investment grade; this rating must not be less than BBB or equivalent;
- more stringent conditions are envisaged for the timing of remuneration of securitized securities other than the senior ones, as well as of the companies that provide the services related to securitization transactions. The timing of the remuneration is linked to the achievement of certain collection levels;
- the regulations governing the consideration of the state guarantee have been modified, both by updating the composition of the baskets of securities taken into consideration for the calculation of the price, and by raising the percentages of price increases linked to the passage of time.