Riccardo Serrini: deleveraging and digital platforms for the secondary market, look at the Italian example

In an interview with Jole Saggese for Class CNBC Report on September 28, Prelios Group CEO Riccardo Serrini comments on the alarm raised by the European Commission Executive Vice President Valdis Dombrovskis at the ECB virtual roundtable on September 25 for the EU Commission, bank credit managers and the European servicers that have already developed digital marketplaces like the Prelios Group's BlinkS platform, universally regarded as a fintech solution to support the secondary market for non-performing loans.

Click here https://www.youtube.com/watch?v=wnojD4fx52M&t=6s  for the full interview. “The ECB and the EBA are trying to anticipate what they think is coming, a sharp increase in non-performing exposures – both NPLs and UTPs – for all banks at a non-national pan-European level,” said the Prelios CEO. “They want to see if it is possible to make the NPL market more liquid, and at the same time improve and expand the secondary market. From Prelios’ point of view, I suggested taking Italy as a reference: not only is it the largest market in Europe for distressed loans, it has made huge strides.

By developing tools to help the banking system deleverage – now one of the strongest in Europe, thanks in part to securitizations with the GACS state guarantee, which has helped banks cut NPLs by more than 60 billion euro in just a few years – and by facilitating the development of a secondary market through the launch of trading platforms like our BlinkS platform. Which has been taken as an example by the ECB for the development of a European market.” Serrini added: “One of the solutions being studied by the European Commission is the creation of national asset management companies, with mixed public and private ownership, to foster market demand for NPLs to compete with the main global funds, which are NPL purchasers all over the world.

Obviously, this is not something global institutional investors are keen on.” Talking about distressed loans levels, the Prelios Group CEO said “April and May were very negative for the main collections on the portfolios we manage. Starting in June, however, the market has stabilized.”