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PERE Growth: Italy doesn't need 'bad bank'

In a keynote speech Jaime Echegoyen, the executive chairman at Sareb, said Italy will not follow in Spain and Ireland's footsteps and set up an asset management company to help banks with their over exposure to the real estate sector.

Despite both Ireland and Spain's 'bad banks' successfully selling real estate assets and non-performing loan portfolios Italy will not follow suit, Jaime Echegoyen, the executive chairman at La Sociedad de Gestión de Activos Procedentes de la Reestructuración Bancaria (Sareb), said at the PERE Growth Forum: Spain & Southern Europe in Madrid yesterday.

“I believe they do not need a bad bank or an asset management company,” Echegoyen told delegates during a keynote speech.

“The reason being, one, they don't want to…the banks don't want to transfer the assets at a loss because they don't feel the need, the pinch.”

After being quizzed on Italy's desire and capabilities to set up a so-called ‘bad bank’ like Sareb, which was established in 2012 to help Spanish banks with their over exposure to the real estate sector, he said that the large Italian banks can take care of their own problems in the non-performing loan sector.

He added that there are too many smaller banks to get them to agree on setting up a 'bad bank' unless they are forced to consolidate by the country's Central Bank, as happened in Spain. “You'd need the Bank of Italy to say you are going to merge and once you have merged then we will take care of the rest of the problems.”

Sareb was created in November 2012 to manage and orderly dispose of the assets acquired from the nine financial institutions that received government funding after the global financial crisis. At the outset it had a portfolio worth €50.7 billion, of which 80 percent represented real estate related loans and 20 percent was hard real estate assets.