European NPL Finance House of the Year — JP Morgan
In a closely fought three-way showdown with Deutsche Bank and Morgan Stanley, JP Morgan emerged as NPL Finance House of the Year. The US house attracted some 38% of respondents’ votes, putting it narrowly ahead of Deutsche (35%).
The firm also claimed a share of GlobalCapital’s NPL Deal of the Year award as a joint arranger of Monte dei Paschi di Siena’s Siena NPL 2018 (as was Deutsche).
This Italian landmark indicates one of JP Morgan’s key strengths in the NPL sector: “dominance in Italy” as a securitization banker from a leading rival puts it. The firm’s “consistent presence in Italy, not just this year but the previous ones too” is a particularly notable factor in its performance, he judges.
With the country’s NPLs having tripled within a decade, according to PwC, and with a new impetus to NPL securitization there from the GACS legislation, Italy stands out as a crucial source for the sector. Scope Ratings has forecast that Italian NPL sales will reach €100bn, with some €60bn in GACS-eligible securitizations.
Against this background, JP Morgan unleashed a raft of new Italian NPL issues last year. Besides its role in the landmark €4.3bn Siena jumbo, these included the €490m ‘POP NPLs’ with Banca Popolare di Bari, two series of ‘BCC NPLs’ (€325m and €560m) with ICCREA Banca, and the €215m ‘Riviera NPLs’ with Banca IMI.
POP packages some €1.6bn of primarily business loans originated by 17 banks including Banca Popolare di Bari; the portfolio is a nearly equal mix of secured and unsecured. The first BCC transaction is based on some €1bn of mainly secured business loans originated by 21 co-operative banks coordinated by Iccrea and another two that form part of Iccrea Banca; the second is based on €2bn of mainly business loans (both secured and unsecured) made by 73 Italian banks. Riviera securitizes nearly €1bn of mostly unsecured business loans by Banca Carige and Banca del Monte di Lucca.
In addition, JP Morgan co-arranged the €590m ‘Aragorn NPL’ transaction with Mediobanca and Société Générale. This securitized a €1.7bn portfolio of loans (mostly secured and predominantly to businesses) by Credito Valtellinese and an affiliate in the Creval group, Credito Siciliano.
JP Morgan’s NPL effort is not confined to Italy. For example, it also encompasses other struggling Mediterranean economies. “They’ve been very active in places like Greece and Cyprus where NPLs have been at amazing levels,” notes another market participant.
Moreover, the firm was appointed by Greece’s Finance Ministry to advise the Hellenic Financial Stability Fund. The pair proposed an Italian GACS-style solution late last year, though the Greek central bank also put a competing plan forward.