Italian loan house FinConsumo Banca plans to issue in the coming months the first 100% synthetic securitization of consumer loans. Maurizio Valfre, cfo in Turin, said the firm has a EUR1.5 billion (USD1.42 billion) loan portfolio and plans to issue two securitizations a year, with one being synthetic. Crédit Agricole Indosuez is structuring the deal, which will be based on a EUR300 million reference portfolio consisting of about 70,000 loans with average maturities of 24-27 months. Officials at CAI declined comment.
A rival structurer agreed this would be the first synthetic securitization of a consumer loan portfolio. He added that previous deals have included a true sale element in order to raise funding. FinConsumo has already issued two cash securitization of EUR300 million each and is structuring this transaction to achieve regulatory capital relief, said Valfre. He added that it does not need the funding because it has recently set up a medium-term program. Another structurer questioned whether this market would take off, adding that most loan houses will only turn to the synthetic market when there are problems with transferring the loans.
Valfre said it chose Crédit Agricole to structure the deal because of the firm's experience in consumer loans and it has a dedicated team in Italy.
The official said the maturity and the structure is still being finalized. FinConsumo is jointly owned by Sanpaolo IMI and Banco Santander Central Hispano.