Exclusive-Italy could take on $17 billion in UniCredit bad loans to ease MPS deal – sources

Italy’s government is working on a plan to take on about 14 billion euros ($17.27 billion) of UniCredit’s non-performing loans to make a deal for state-owned Monte dei Paschi more attractive to the country’s second-biggest bank, sources said.

State-owned bad loan manager AMCO is looking to hoover up a significant tranche of UniCredit’s bad debt while also ridding Monte dei Paschi of its high-risk loans, two sources toild Reuters, speaking on condition of anonymity as the matter is confidential.

The plan is part of a set of measures being readied by the Treasury in order to press ahead with the sale of MPS even as rifts within the ruling coalition risk toppling the government.

The Treasury, AMCO and UniCredit declined to comment.

The Treasury aims to have a range of solutions ready by the end of January to tackle all the complexities of a deal, including providing possible state guarantee to shield MPS future owner from around 10 billion euros in legal claims which are weighing on the bank following decades of mismanagement.

The end goal is to have a deal ready to be approved by UniCredit’s annual general meeting in April, another source with knowledge of the matter said.