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Italy's BPER kicks off process to sell bad loan management unit-sources

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MILAN (Reuters) -BPER Banca has kicked off a process to potentially sell its debt collection business as its new Chief Executive Piero Montani works on a new business plan for Italy's fifth-biggest bank, four sources close to the matter said.

BPER is the last of Italy's large banks to have maintained full ownership of its debt servicing operations, and the disposal would bring a coveted asset on to the market.

Two of the sources said the process had drawn strong interest and a large number of players planned to access the data room to study the business's financial figures.

Leading Italian banks including UniCredit, Intesa Sanpaolo and Banco BPM have all offloaded in full or in part their debt recovery businesses in recent years, in lucrative deals that have helped them offset the cost of shedding large portfolios of bad debts.

Debt collection businesses are normally sold with contracts to manage flows of new loans turning sour. These contracts ensure steady streams of fees for buyers in following years.

At the end of last year BPER held 4.03 billion euros in impaired loans, equivalent to just above 5% of the total. That compares with a 3.6% ratio at UniCredit and 3.2% at Intesa.

BPER's rival Banco BPM in 2018 reached an accord with Elliott-backed Credito Fondiario to sell 70% of its bad debt collection unit in a deal that valued the business at 143 million euros.

As part of the deal it offloaded 7.8 billion euros in bad loans.

Credito Fondiario, which has since renamed its bad loan business as Gardant, later bought also the bad loan unit of Banca Carige, a smaller ailing lender which is in the process of being taken over by BPER.

(Reporting by Valentina Za, editing by Gavin Jones and Keith Weir)

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