Italy’s MPS maintains capital reserves through loan securitization deals

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MILAN, 23 July. (Reuters)State Italian bank Monte dei Paschi di Siena BMPS.MI said on Friday it would free up capital through two synthetic transactions that would reduce credit risk on corporate loans by € 1.4 billion ($ 1.7 billion).

Monte dei Paschi (MPS) said it repackaged the loans into securities and shifted risk to the junior and mezzanine tranches to finance Christofferson Robb & Company through a guarantee agreement.

MPS said this is the first of its kind in Italy in a so-called “stage 2” loan – assets that are beginning to show signs of deteriorating credit quality.

The deal was arranged by Intesa Sanpaolo, and Chiomenti acted as legal adviser.

(1 dollar = 0.8504 euro)

(Report by Valentina Za, edited by Maria Pia Quaglia)

((valentina.za@thomsonreuters.com; +39 02 6612 9526;))

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