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MILAN, March 21 (Reuters) – Italy’s Cerved monetary organization said on Saturday talks to sell its debt collection arm to Europe’s largest debt collection company, Intrum, had failed because of the coronavirus outbreak that is destroying the Italian economy.
The Italian government expects gross domestic product to shrink by 3% this year after imposing a nationwide lockdown to combat the virus, which has killed more people in Italy than in any other country.
Intrum Italia and Cerved entered into exclusive negotiations in mid-February, days before the outbreak of the virus, which has since caused more than 4,000 deaths and affected at least 47,021 people.
Cerved said in a statement that the exclusivity period granted to Intrum Italia expired on March 20 and that negotiations were interrupted due to “the existing economic and monetary scenario attributable to the epidemiological emergency of COVID-19. “
The sources indicated that Intrum Italia had submitted more than 450 million euros for Cerved’s debt recovery unit.
The deal is seen as the first major consolidation step in Italy’s ailing credit sector, where expansion is slowing after a large-scale advertising-driven boom as banks clear their balance sheets of the legacy of past recessions.
Cerved is exploring the option of promoting its NPL department following the early termination of a debt collection contract with the Monte dei Paschi di Siena bank, to concentrate on its credit knowledge business.
Italy’s new economic downturn is expected to lead to a further increase in unpaid debts, while making it harder to obtain existing troubled loans.
A spokesperson for Intrum Italia declined to comment, referring to March 13 via Intrum.
The Swedish company said the coronavirus crisis had led it to reduce its investment levels and increase the rate of return required for new investments, adding that it was reviewing ongoing M&A plans and prioritizing percentage buybacks.
Intrum said he expects a withholding of money in Italy, where courts have closed their doors. It said it had taken “comprehensive measures to ensure we can continue our business as usual, as far as possible. “
In 2019, Italy accounted for 4% of Intrum’s total monetary earnings before interest, taxes, depreciation and amortization. (Reporting by Valentina Za, editing by Helen Popper)
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