VENICE18 SEPT

NPL MEETING2015

FOCUS ON ITALYAND SPAIN

NPLMEETING 2015

FOCUS ON ITALYAND SPAIN

VENICE 18 SEPTEMBER

TITOLO • TITOLO 54 NPL MEETING 2015

PEOPLE EVENT PERSONNEL70

9%ADVISORS35%

BUYERS

2%

6%

23

NETWORKING AREAS 14

1DEDICATED

APP

ZEROACCREDITATION FEES

INVITATION ONLY

EVENT 1ST IN ITALY ON NPL

NPLINTERNATIONAL MEETING

FOCUS ON ITALY&SPAIN

PANEL DISCUSSIONS

SPEAKERS

LAW FIRMS

SERVICERS

400PARTICIPANTS

2

CATEGORIESOF PLAYERS REPRESENTED6 EDITION4TH

37%ORIGINATORS

2015 represents a record edition with almost 400 attendees from all over the world, of which 35% buyers, 37% originators, 9% advisors, 6% law firms and 2% servicers.

76

1st Roundtable • UNSECURED assets1. Banca IFIS, Andrea Clamer2. Cerberus, John Priest3. Hoist Finance, Charles De Munter4. Intrum Justitia, Alessandro Pappalardo5. Anacap, Justin Sulger6. Unicredit, Alberto Vigorelli7. Banco Popolare, Paolo Tosi8. Deutsche Bank, Roberto Guidi9. Bankia, Iñigo VelázquezQ&A session

2nd roundtable • SECURED assets (Real Estate and Corporate) part 1 1. Capital Light Bank Intesa, Carlo Viola2. Italfondiario, Fabio Balbinot3. Algebris, Massimo Massimilla4. MPS, Massimo Giacobbo5. Haya RE, Juan Manuel Hoyos6. Cerved, Andrea Mignanelli7. Situs, Bruce Nelson8. Prelios, Riccardo Serrini9. Pillarstone, Raimondo Bonfanti

Special guest: Simone Moro

Standing-up lunch

Interview with Jaime Echegoyen, Executive Chairman of Sareb

2nd roundtable • SECURED assets (Real Estate and Corporate)part 2 and Q&A session

Conclusion and final greetings

NPL Overview on the Italian and Spanish marketsAntonella Pagano, PwC ItalyJaime Bergaz, PwC Spain

Guests registration and networking meetings

Italy & Spain through their macroeconomic framesRichard Portes, London Business SchoolQ&A session

Welcome and IntroductionGiovanni Bossi, CEO of Banca IFIS

9.15 AM

9.45 AM

7.30 AM 8.45 AM

9.15 AM

9.45 AM

10.30 AM

9.00 AM

10.30 AM 12.15 PM

2.45 PM

12.15 PM 1.00 PM

2.45 PM

3.45 PM

4.15 PM

5.15 PM

5.30 PM

1.00 PM

3.45 PM

4.15 PM

5.15 PM

AGENDAAGENDA

8 9WELCOME AND INTRODUCTIONWELCOME AND INTRODUCTION

330 billion Euro of distressed assets in the banks’ balance sheets are a disaster for the Economy. This situation doesn’t allow Italy to react with the right strength to support growth.The goal of the NPL Meeting is to share data, ideas and actions to undertake.

GIOVANNIBOSSICEO BANCA IFIS

SIMONEMORO

Impossible does not exist. Only the ALMOST impossible exists.

Photo © Cory Richards | The North Face Courtesy of Simone Moro

13

NPL OVERVIEW

THE ITALIANAND SPANISHMARKETS

NPL OVERVIEW • THE ITALIAN AND SPANISH MARKETS

JAIME BERGAZ

PwC SPAIN

ANTONELLA PAGANO

PwC ITALY

InSpainthefinancialcrisisbeganasconsequenceoftherealestatebubble:from2000to2007therewasanstaggeringgrowthofpricesintheREsector,bankshadquitealooseapproachtomortages,thinkingtheywereinsuredbythevalueofthecollateralgoodsthat,instead,droppedtheirvalue. Nowtheseassetsforatotalof425billioneuroareheldbySareb,theSpanishbadbankcreatedin2012.

IntheItalianmarketweareseeingsomethingthatalreadyhappenedinSpainin2012.Incomparisonto1yearago,inItalytherearemoretransactions,inwhichtheplayerareoftenthesamethatoperatedsomeyearsagointheSpanishNPLmarket.TodayweseemoretransactionscarriedoutinItaly,bothsecuredandunsecured.Inayear’stime,weexpecttoseeanincreaseofinvestorsintheItalianNPLmarket.

1514 NPL OVERVIEW • THE ITALIAN AND SPANISH MARKETS NPL OVERVIEW • THE ITALIAN AND SPANISH MARKETS

6280

110128

146125 119

3127

30

39

51

48 47

25

33

33 33

93107

140

192

230

206 199

5%6%

8%

10%

16%

13% 12%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

-

50

100

150

200

250

% D

elin

quen

cy ra

tio

€ bn

SMEs/Corporates Individuals Sareb Delinquency Ratio (%)

Non-performing loans trend in the Spanish market

Non-performing loans (NPLs(1)) evolution

Corporate/SMEs(3)

Individuals(2)

(1) When a contract is 90 days past due since the first unpayment

(2) Breakdown of doubtful loans by type of spending(3) Breakdown of doubtful loans by main activity. We have considered all activities related to Real Estate.

(4) Total NPLs transferred to Sareb by Spanish financial entities

Source: Bank of Spain as of September 2015

Creation of SAREB(4)

Non-performing loans (1Q 2015)

€119bn56%44%

Real Estate Sector Others

28%

72%

Unsecured NPLs Secured NPLs

€47bn

2009 2010 2011 2012 2013 2014 1Q 2015 32,2

14,1

14,6

19,0

19,5

26,4

40,3

88

a

a

b

c

b

a

aBad Bank(1)

Top 6Spanishbanks bytotal assets

68%

(1) SAREB’s annual statement as of December 2014. 88bn include REDs and REOs performing and non-performing

Source: Banks’ annual statements and PwC analysis

Rest ofSpanishBank

— #12 #18 na

#12 #6 #4 #2

#2 #1 #4 #3

#1 — #2 —

#2 — #2 #2

— #2 #2 #2

#3 #1 #1 #1

#13 #7 #7

#1

#2

45

64

#5

3.6

7.9

6.2

2.5

4.3

3.5

3.5

13.3

Total deals €55.7bn

2012 2013Total Face

Value (€ bn)2014 2015

NPLs as of 2Q 2015 # Deals closed

Spanish market players – Top 6 Spanish Banks + SAREB

4259

78

107125

156

184 194

3%

5%

6%

8%

10%

12%

0%

2%

4%

6%

8%

10%

12%

14%

-

50

100

150

200

2008 2009 2010 2011 2012 2013 2014 H1-2015

€ bn

Gross NPL (€ bn) Gross NPL / Loans to Customers (%)

Gross NPLs (“sofferenze”) trend in the Italian marketBanks non-performing loans (Gross NPL)

56%

NPL Coverage ratio Top 20 Banksas of 31.12.2014

Gross NPL breakdown as of 31-03-2015(1)

Gross NPL breakdown as of 31-03-2015

45%55%

Secured NPL

UnsecuredNPL

82%

16%

2%

Corporate

Retail

Other

(1) Secured by mortgage and / or pledge

Source: PwC analysis on Bank of Italy Bollettino Statistico (Bollettino II Trimestre 2015) and ABI Monthly Outlook (July 2015)

2%

13%

Gros

s N

PL /

Loan

to C

usto

mer

s

2008 2009 2010 2011 2012 2013 2014 H12015

Italian NPL market players – Top 5 Italian Banks + BCC and Others

Gross NPLs as of 2Q 2015 (1)

% overGross NPL

Total GBV ( € bn) # Deals

2012 2013 2014 2015

BCC (1)

Top 5 Italianbanks bytotal assets

Rest of ITBanks +Other Fin.Institutions

Several ConsumerCredit Companies

20%

20%

13%

4%

6%

8%

7.51.6

1.90.20.20.4

11.0

- #1 #2 #4

#1 - - -

- - #2 #1

- - - #1

- #1 #1 -

- - #1 -

#6 #7 #9 #7

Asset class

Mixed Portfolio,Leasing, Consumerand Platform

Mixed Portfolio

Mixed Portfolio,Consumer

Unsecured

Mixed Portfolio

Mainly ConsumerCredit

Mixed Portfolio

15

11

7

25

38

39

TITOLO • TITOLO 1716 NPL OVERVIEW • THE ITALIAN AND SPANISH MARKETS

Italian NPL market players – Main Special Servicers

Non Captive Servicers (Banking NPL Secured & Unsecured) Debt Collectors (Mainly Consumer & Corporate)

1

2

2

3

4

5

5

9

10

40(1)

Independent

Independent

Independent

Independent

Independent

Mainservicers AUM2014 (€ bn)Shareholders

Independent

NPL

Total servicers (AUM) €80 bn

(1) Italfondiario AUM does not include UCCMB assets

Assetsmainlyowned byinvestors

… a very fragmented market withca 1300 companies / familybusinesses among which

Asset owner

Spanish market players – Main special servicers

Main servicers (GBV 2014 € bn)

Main servicers (AuMs) € 225bn

(1) Does not include BMN portfolio

Source: PwC market information; Company memories; company website

Main servicers Ownership

(1)

Ownership Asset owner

8

25

33

33

36

45

45

a

b

c

d

e

f

g

Private shareholders

Secured servicers Unsecured servicers

Main servicers (AuMs) € 135bn

Spanish market players – Main special servicers

Main servicers (GBV 2014 € bn)

Main servicers (AuMs) € 225bn

(1) Does not include BMN portfolio

Source: PwC market information; Company memories; company website

Main servicers Ownership

(1)

Ownership Asset owner

8

25

33

33

36

45

45

a

b

c

d

e

f

g

Private shareholders

Secured servicers Unsecured servicers

Main servicers (AuMs) € 135bn

Italian NPL market players – Main Special Servicers

Non Captive Servicers (Banking NPL Secured & Unsecured) Debt Collectors (Mainly Consumer & Corporate)

1

2

2

3

4

5

5

9

10

40(1)

Independent

Independent

Independent

Independent

Independent

Mainservicers AUM2014 (€ bn)Shareholders

Independent

NPL

Total servicers (AUM) €80 bn

(1) Italfondiario AUM does not include UCCMB assets

Assetsmainlyowned byinvestors

… a very fragmented market withca 1300 companies / familybusinesses among which

Asset owner

Spanish market players – Main special servicers

Main servicers (GBV 2014 € bn)

Main servicers (AuMs) € 225bn

(1) Does not include BMN portfolio

Source: PwC market information; Company memories; company website

Main servicers Ownership

(1)

Ownership Asset owner

8

25

33

33

36

45

45

a

b

c

d

e

f

g

Private shareholders

Secured servicers Unsecured servicers

Main servicers (AuMs) € 135bn

Italian NPL market players – Main Special Servicers

Non Captive Servicers (Banking NPL Secured & Unsecured) Debt Collectors (Mainly Consumer & Corporate)

1

2

2

3

4

5

5

9

10

40(1)

Independent

Independent

Independent

Independent

Independent

Mainservicers AUM2014 (€ bn)Shareholders

Independent

NPL

Total servicers (AUM) €80 bn

(1) Italfondiario AUM does not include UCCMB assets

Assetsmainlyowned byinvestors

… a very fragmented market withca 1300 companies / familybusinesses among which

Asset owner

Spanish market players – Main special servicers

Main servicers (GBV 2014 € bn)

Main servicers (AuMs) € 225bn

(1) Does not include BMN portfolio

Source: PwC market information; Company memories; company website

Main servicers Ownership

(1)

Ownership Asset owner

8

25

33

33

36

45

45

a

b

c

d

e

f

g

Private shareholders

Secured servicers Unsecured servicers

Main servicers (AuMs) € 135bn

TITOLO • TITOLO 1918 ITALY & SPAIN THROUGH THEIR MACROECONOMIC FRAMES

ITALY & SPAIN

THROUGH THEIR MACRO-ECONOMIC FRAMES

RICHARD PORTES

LONDON BUSINESS

SCHOOL

WHAT ARE THE SPECIAL

PROBLEMS IN ITALY?

Incentives for banks to sell are weak, pressures against are strong

Many of the smaller, local banks are ‘zombies’, kept alive because of political pressures and exaggerated role of local shareholders

They can argue that NPLs will become sound as economy turns up

Problematic insolvency procedures and enforcement of collateral judgments

Waiting for a ‘bad bank’ (asset management company - AMC) solution from government

2120 ITALY & SPAIN THROUGH THEIR MACROECONOMIC FRAMESITALY & SPAIN THROUGH THEIR MACROECONOMIC FRAMES

SO THERE ARE THREE ‘SOLUTIONS’WHAT SHOULD

ITALY DO?

There is high market demand for NPL assets

An AMC – but state aids issue

Wait it out, hoping for growth that will lift SMEs – but there won’t be much growth if there is no investment, and investment will be weak if the banks continue to be burdened by NMPLs

Consolidation of the banking sector, resolution or sale of the ‘zombies’, cut costs, raise capital, and get to the point where the remaining banks can sell their NPL portfolios

But don’t expect a broad Eurozone or global expansion that will carry Italy with it and push this problem aside

Need to get them off banks’ books to free up capital and internal managerial resources (get them off NPLs, onto new loans)

If an AMC, do it now – or forget it: delay blocks market solutions

Do whatever additional is possible to accelerate judicial processes for foreclosure and contract enforcement – may need more legislation

Need more transparency for bad asset portfolios and for debtors – that may require legislation to limit privacy rights

A big push for much better IT systems and data

01

02

03

23

FIRSTROUNDTABLE

UNSECUREDASSETS

1ST ROUNDTABLE • UNSECURED ASSETS

Andrea ClamerBanca Ifis

John PriestCerberus

Charles De MunterHoist Finance Alessandro Pappalardo

Intrum Justitia

Justin SulgerAnacap

Alberto VigorelliUnicredit

Paolo TosiBanco Popolare

Roberto GuidiDeutsche Bank

Iñigo VelázquezBankia

2524

WeareverysurprisedofhowquicklypriceshaveincreasedintheItalianmarket,giventhattherehasbeenmodestrecoverysofar.Thatsaysalotabouttheinvestors’universe:there isalotmoreappetite

Thequalityofthefileandtheeasyaccesstodocumentationhaveadirectimpactontheprice

Investorsareinterestedin veryyoung portfolios

Howtosellsecuredassetsisthebigdeal,asitwouldgivemorecoverageontheremainingportfolioandCapitalrelease

Ifanassetmanagementcompanyneedstobecreatedithastobedonenowandinlineofmarketprices

Spainiscomingoutofthisphase,whereweseemoreassetsales,moredevelopedprocesseslikeforwardflows,andthesecondarytrademarketisstartingtoemerge

Marketsgothroughaseriesofevolutions:fromanemergingmarket,wherethereareverybespoketransactions,toamoreevolvingmarket,withintermediariesmakingtheprocessmorecomplete.Italyisnowbetweenthefirstandthesecondstage.

Thereisanaccelerationinthesalesprocess,and anindustrializationoftheroles

Italydoesnotneed abadbank,especiallybigbankshavealreadymanagedthisproblemindependetely.Theproblemisthatbanksdon’tselltheirassetsbecausetheyarewaitingtoseeiftheGovernmentcreatesabadbank.

InSpain,afterthecreationofSareb,asustainablemarketwascreated.

Italyhasamarketthattendstolegalizealot,whichisverycostlyandtimeconsuming.There’saneedtoimprovetheamicableresolutionsstrategies

Smallerbanksneedtounderstandthatiftheywanttoenterthismarketinasignificantway,theyhavetoworkinanetpresentvalueperspective,ofvaluecreationfortheshareholders

TRUST

GO STRAIGHT

BE POSITIVE

SHAREINFORMATIONANDTHE SUCCESS

1 /

2 /

3 /

4 /

TEAM-WORK

SIMONE MOROPhoto © Cory Richards | The North Face Courtesy of Simone Moro

292ND ROUNDTABLE • UNSECURED ASSETS

SECONDROUNDTABLE

SECUREDASSETS

Carlo ViolaCapital Light Bank Intesa

Fabio Balbinot Italfondiario

Massimo MassimillaAlgebris

Massimo Giacobbo MPS

Juan Manuel HoyosHaya RE

Andrea MignanelliCerved

Riccardo SerriniPrelios

Bruce NelsonSitus

Raimondo BonfantiPillarstone

REAL ESTATE

AND CORPORATE

3130 2ND ROUNDTABLE • UNSECURED ASSETS 2ND ROUNDTABLE • UNSECURED ASSETS

Italyneedstoconsolidateitsbankingsystem,there’snoneed tohavesomanybanks

Ofthe190billionofdeterioratedassetsinItaly,50-60%arecollateralizedwithrealguarantees:soonthecreditproblemwillbetransformedinhowtomanagetherealestateproperties

IthoughtItalyhadalreadycreatedthebadbank

Weaddnewcompetencesandnewpersonnel,specificteamsontopticketsegmenttoacceleratethecollectionprocess.Weseeagreatinterestonthebuyers’side

betweendemandandofferissmaller.Wherethecollateraliscomplicated,intheindustrialsector,thesaledon’tproceedandthestockshrinksbecauseofthepricinggap

Thesalesthatwehaveanalizedinthelast18monthsarefocusedon50billionofnon-performingloansofindividualsandenterpreneurs,wherethecollateralissimpleandthegap

Thegoalistodeleverageasegmentedportfolio:wealreadydiditwithapartofit,disposingofabout6billion

Outsourcingisthe rightdirectionforItaly,itcanfosterbanksandhavingamoreefficientservicewithoutpayingtoomuch

WehopethatinnovationwillimprovetheItalianlegalsystem. Fortoday,theincentivethatwehaveistobeproactivetowardstheopenmarket

WeneedtohaveclearinourmindthatourprofessionisbeingSERVCER,weareattheserviceofourclients.Wedon’townanyofthe45billionthatwemanage,itisinthehandsofourclients

33INTERVIEW WITH JAIME ECHEGOYEN

Differently to what happened in Spain, Italy does not needan asset management companybut something must be done to resolve this situation.Italy needs a system solution.

watch the video

JAIME ECHEGOYEN

EXECUTIVE CHAIRMAN

OF SAREB

TWEET

GALLERY

@BancaIFIS#nplmeeting

#profPortes @LBS “what should Italy do?” Among the

suggestions: “ a big push for much better IT

systems and data”

@BancaIFISJaime Bergaz

@PwC_Spain: oggi il mercato bancario spagnolo è maturo #NPL #NPLmeeting

@BancaIFIS#nplmeeting a.m.

#networking #sharing #learning

@BancaIFIS#nplmeeting

afternoon interview: Jaime Echegoyen Chairman,Sareb.

“You cannot solve megaproblems at

once. You must break them into pieces”

@damiano_sestyleSimone Moro on stage: il professionista vende un sogno #nplmeeting

@bancaifis

@Ale_Donadio#NPLmeetingincontro fra gli

operatori italiani e spagnoli su questo

tema. Un confronto per trovare modalità ed approcci comuni.

@CaffeAffariLiveBanca #Ifis,

#nplmeeting: il focus sul credito in Italia.

Live da Venezia @ceru2 intervista @GiovanniBossi

@GiovanniBossi #nplmeeting Analisi su funzionamento

mercato tra banche e investitori. Interesse

alto. @ACLAM23 #banche @BancaIFIS

@AlbertoSondriGrande partecipazione e molta attenzione.. ci sono tutti gli elementi per un grande evento

#nplmeeting

@AStaccioneOggi #nplmeeting, per

parlare di mercato #npl, opportunità e

strumento per liberare il credito e la ripresa

economica

@CreditVillageCVIl discorso di apertura

di Giovanni Bossi #NPLmeeting

@BancaIFISCountdown: -2 days

to #NPLmeeting #workinprogress.

Stay tuned! #NPLmeeting

#NPL #meeting #september18

TWEET GALLERY

NPL Meeting 2015

Class CNBC, Collegamento, Intervista a Riccardo Serrini, Prelios CreditServicing

Class CNBC, Collegamento,

Punto della situazioneCarlo Cerutti

Simone Moro’s Presentation

NPLs in Italy and Spain: Macro Context and Micro ‘Solutions’Richard Portes, London Business School

CLASS CNBC, Collegamento di lancio, Intervista a Giovanni Bossi, Banca Ifis

Class CNBC, Collegamento,

Intervista a Raimondo Bonfanti, Pillarstone

Class CNBC, Collegamento, Intervento di Jaime Echegoyen, Sareb

NPL Meeting 2015 in numbers

NPL Overview on Italian and Spanish Markets, Antonella Pagano and Jaime Bergaz, PwC

02

01

03

05

06

08

09

1004

07

PDF

PDF

PDF

PDF

VIDEO VIDEO

VIDEO

VIDEO VIDEO

VIDEO

DOWNLOAD

DOWNLOAD

39

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