Announcements

    Drinks

      Government proposal could inflict significant collateral damage on Italian NPL market
      MONDAY, 04/09/2023 - Scope Ratings GmbH
      Download PDF

      Government proposal could inflict significant collateral damage on Italian NPL market

      Italian government proposal AC 843, aimed at supporting borrowers in financial difficulty by giving them the option to buy back exposures already sold to third parties through ABS or loan disposals, has created significant turbulence in the NPL market.

      Taking up the buyback option would allow borrowers to clean up their credit status at the Central Credit Register (Centrale Rischi) and give them access to new financings. The proposal would have no immediate impact on banks’ credit quality but the knock-on effects of its retroactive nature could cause significant damage to the NPL market.

      The retroactive nature has created concern among investors and other market participants so appetite for Italian NPL transactions is likely to plummet as uncertainty is priced in. We expect the proposal would have limited impact on the performance of Italian NPL securitisations, though.

      Determining repurchase prices is open to interpretation but it can be inferred that borrowers would pay the average of the portfolio price to which loans belongs as a percentage of gross book value plus a premium. This definition would benefit some borrowers but penalise others, independent of their capacity to pay the option price.

      We believe a relatively a small share of borrowers would exercise the option because it would be very difficult to implement. The content and formalities of the notification process may also trigger litigation by debtors, which would lengthen resolution timing. We anticipate delays in transaction cash flows until the proposal is passed or rejected.

      Download the full comment here

      Watch the full replay of our in depth webinar from 04 September

      Make sure you stay up to date with Scope’s ratings and research by signing up to our newsletters across credit, ESG and funds. Click here to register.

      Related news

      Show all
      No rating impact on 2Worlds rated notes after special servicer replacement – Italian NPL

      11/7/2025 Monitoring note

      No rating impact on 2Worlds rated notes after special ...

      French bank quarterly: net interest income and strong CIB performance support revenue momentum

      11/7/2025 Research

      French bank quarterly: net interest income and strong CIB ...

      Webinar: Mid-year European banking outlook

      10/7/2025 Research

      Webinar: Mid-year European banking outlook

      Scope affirms Danske Mortgage Bank PLCs Finnish mortgage covered bonds rating at AAA, Stable Outlook

      8/7/2025 Rating announcement

      Scope affirms Danske Mortgage Bank PLCs Finnish mortgage ...

      Scope has completed the periodic review of Series 2022-308 notes issued by SPIRE SA

      8/7/2025 Monitoring note

      Scope has completed the periodic review of Series 2022-308 ...

      Scope has completed a monitoring review for Landwirtschaftliche Rentenbank

      7/7/2025 Monitoring note

      Scope has completed a monitoring review for ...