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A success story of fast growth – in the last 5 years, Credito Fondiario has become one of the major operators in the sector of credit management

Credito Fondiario is a leader in the Italian credit sector, in which it operates with a distinctive business model as both debt purchaser (purchase of NPL and UTP) and debt servicer (management and recovery of impaired loans), with a banking license. 
The business model adopted by Credito Fondiario has been innovative in the Italian market, adapting the one used by the major international players operating in the Credit Management sector.

A 120-old start-up

The top management and Tages, a leading independent asset manager in alternative assets with $2.3 billion under management in which a group of Italian entrepreneurs met, acquire control of Credito Fondiario from Morgan Stanley at the end of 2013 – at a time when the institution, which had a history of over 100 years, was accumulating over €20 million of losses per year.

The team, whose strategy was clear, achieved a successful turnaround: it aimed to create an Italian bank that operates in the secondary credit market, with a very wide range of products and services, able to compete with the biggest players of the sector, such as large international funds and services.

Currently, the top management is the minority shareholder alongside the new majority shareholder – Elliott, which holds 82% of the capital.

A constant growth: key numbers

Within 5 years, Credito Fondiario has become a benchmark operator in the market, growing in dimension, obtaining a strong competitive positioning, working as partner beside banks and institutional partners.
The assets under management accounted for EUR 4 billion in 2014, and today they are more than EUR 55 billion, and EUR 15 billion are assets managed as special servicer.

A change in scale

With the signature of the final contract with the Elliott fund for the acquisition, for an amount of EUR 7.4 billion of non-performing loans by Banco Bpm, and the creation of the CF Liberty Servicing management platform in a joint venture with Banco (of which Credito Fondiario owns 70% of the shares, and Banco Bpm 30%) – probably the last large transaction in the market – Credito Fondiario is to massively increase its workforce, which will grow from 50 to around 350 at the end of 2019; the investments made the company grow up to EUR 700 million (for a nominal value of credits purchased of almost EUR 4 billion). At the same time, the bank maintains one of the highest level of capitalization and financial solidity in the sector. Credito Fondiario closed 2018 with a net profit of EUR 24.8 million, as compared to a loss of EUR 1.1 million year-over-year.

Credito Fondiario is benchmark operator for large operations in the Italian market, in a domestic market characterized by banks which have the need to reduce the non-performing loans on their balance sheet (the so-called derisking).

Credito Fondiario took part in the entire process, covering different positions thanks to the flexibility of its business model. The institution is:

  • Master and Special Servicer of the largest transfer of credits ever conclude worldly, the one with Monte dei Paschi di Siena
  • Master Servicer for the securitization of non-performing loans with some Banks of the Veneto Region (Vicenza, Veneto)
  • Investor, Master Servicer and Special Servicer in bailout operation realized through the disposal of non-performing loans, for the so-called Good Banks (Banca Etruria, Banca Marche, CariChieti, CR Ferrara)
  • Investor, Master Servicer and Special Servicer in some operations of dis-investment of NPL and/or UTP, realized by Banca Carige and Credito Valtellinese, including the role of servicer in the two last GACS securitization.

NPL acquisition and platform for the Carige Bank management

In particular, at the end of 2017 Credito Fondiario, following a competitive process, reached an agreement with Carige which led to the acquisition of:

  • a non-performing loans portfolio (the majority with a property collateral) with a gross value of around EUR 1.3 billion;
  • the business unit of Banca Carige dedicated to the management of non-performing loans, which is currently composed of 50 people;
  • a 10-year contract for the management of the majority of the existing and future non-performing loans.

The acquisition of the business unit of the company was completed on May 14th, 2018, and it was preceded by a trade union agreement between Banca Carige and Credito Fondiario, which has allowed them to align the contractual terms of the employees and the branch of the businesses, with the Credito Fondiario best conditions.
Today, more than 50 resources work in the new central headquarter of Credito Fondiario in Genoa, in a building located in via 20 Settembre, in which employees from Milan and Rome will be relocated.
Genoa will be the core of a growth plan, and this will lead to more business occasions and therefore new jobs, leading to a great advantage for the whole city.

Acquisition of NPLs and partnership with Banco Bpm

CF Liberty Servicing, the new platform of recovery and management of non-performing loans in joint venture between Credito Fondiario and Banco BPM, was created at the end of June 2019.

The society – 70% owned by Credito Fondiario and 30% by Banco BPM – will manage the EUR 7.4 billion portfolio of the Bank as servicer. The bank was acquired by Elliott in the context of a securitization concluded on February 2019, with GACS on senior debts, the remaining stock of NPLs of Banco BPM and, in the next 10 years, a relevant portion (equal to the 80%) of the new streams of NPLs.

With this operation, Credito Fondiario has asserted its position as the leading society in Italy in the credit management sector, and significantly increased the number of its employees who, thanks to the joint venture, will have their number increased to nearly 350, now located in Bergamo, Verona, Lodi and Naples.

During the last 24 months, Credito Fondiario has conducted due diligence activities on over EUR 45 billion of NPL and/or UTP loans, analyzing a large portion of the Italian credit market in all its ramifications (real estate, retail, leasing, corporate etc.)

A successful formula – the reasons for the success of Credito Fondiario must be found in the will of the top management and its shareholders (Elliott owns around 82% of the capital, while the remaining 18% is held by Tages and the top management) to focus on a mix of skills, innovation and a great deal of knowledge of the Italian market:

  • Distinctive skills – the professionals who have joined Credito Fondiario in the last 24 months are all characterized by high skills and experience, having worked for the best operators in the sector; otherwise, they are young people with an excellent academic experience. The bank features distinctive skills in several areas: portfolio management, structuring, capital markets, real estate, leasing and loan administration servicing. Credito Fondiario has introduced performance-oriented short- and long-term incentive policies, almost for the entire workforce.
  • Process and product innovation – Credito Fondiario has fully implemented a revision and renovation process of every single phase used by the bank to transfer its impaired loans. Today, Credito Fondiario can: (i) completely structure a sale transaction of any distressed asset class; (ii) carry it out in interaction with rating societies, financing banks, Supervisory Authorities and law firms; (iii) implement it, transferring millions of files from the transferor to the securitization vehicles, thanks to an IT integrated system and to re-engineered management processes. Nearly 25% of the total cost and annual investment of the institution are made in technology and process innovation.
  • Italian market knowledge – Thanks to the significant due diligence work carried out on multiple bank portfolios, as well as to the huge experience on specific asset classes (real estate, leasing, bad debts and doubtful loans, corporate credit), Credito Fondiario has gained a strong knowledge of the Italian distressed market, which has recently been codified thanks to an open software and big data technologies, which allow the team to evaluate credits and assets in a very short time, with a database constantly updated according to the evolution of the real estate market. Therefore, in 2018, N3A was created – a software made up of neuronal network, big data and artificial intelligence, developed by Credito Fondiario’s technicians in order to deal with the non-performing loans in a more competitive way. N3A performs a very high-speed data processing, providing thousands of assessments in less than 5 minutes, working on a database that manages the historical archive of over EUR 50 billion in doubtful or non-performing loans, corresponding to millions of positions, in addition to continuously updated external data sources.

Shareholders

Since 2016, the Top Management and Tages have been joined by Elliott, one of the largest investment company in the world, which became the majority shareholder of the Bank in October 2018.

Elliott, with a long-term vision, supported Credito Fondiario’s growth in the last years with the injection of new capital and strengthening the managerial structure – aiming to make it become a true, well-known market leader.

Top Management

  • Panfilo Tarantelli,
  • Chairman, Co-founder of Tages. 35-year experience in the financial services sector in Europe.
  • Iacopo De Francisco, General Director. More than 20 years in the corporate and retail banking and in strategic consulting.
  • Guido Giulio Fortunato Lombardo, Chief Investment Officer. 30-year experience in merchant banking, private equity, advisory, lending and structured finance.
  • Mirko Gianluca Briozzo, Chief Business Officer and Deputy General Manager. More than 20 years of experience in investment & corporate banking, M&A and capital markets.

In short

  • Fast and high-quality growth, with managed assets amounting to EUR 55 billion (GBV);
  • Primary role in all major operations in the sector: MPS, Vente, Good Banks, Carige, Creval, Banco BPM;
  • Financial strength:
    • One of the highest levels of capitalization in the system (CET1 ratio: 17.9%);
    • Relevant network of relationships with leading international investors;
    • Solid long-term international partner.
  • Strong focus on human resources and professionalism: for instance, the Bank grew from a team of 50 resources at the time of the Tages’ acquisition to 350 units today;
  • Innovation center for the development of innovative solutions to manage NPLs and UTPs;
  • Business project with industrial focus;
  • Fully Italian top management with entrepreneurial backgrounds and great experience in the financial sector;
  • Stable corporate structure committed to guarantee support to the bank’s growth progress;
  • One of the most dynamics players of the sector;
  • Large availability of capital, thanks to the support of Elliott, the majority shareholder;
  • Unique and innovative business model – debt purchaser and debt servicer;
  • Professional performance of other high value-added activities: advisory, capital markets;
  • Fully operational banking platform and license;
  • Team specialized in the real estate, UTPs, leasing and secured NPLs;
  • Management platform rated by both S&P and Fitch.