The Italian NPEs market - From darkness to daylight Minds made for shaping financial services - EY
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The Italian NPEs market From darkness to daylight Minds made for shaping financial services
Contents
Foreword
1. Recent asset quality trends…………… 3
• Key metrics
2. Regulatory framework: pressures
and opportunities………………………….. 10
• NPEs regulatory framework
• IFRS 9 first time adoption
3. Update on the Italian real estate
market……………………………………………. 18
4. NPEs transactions…………………………. 25
• Portfolio sales
• GACS scheme
• Outlook and pipeline
5. Evolution of the servicing market…. 34
• Competitive scenario
• M&A trends
6. Appendices…………………………….………. 41
• Alternative options for effective
management of unlikely-to-pay loans
• Focus on non-performing leasing assets
1
The Italian NPEs market: from darkness to daylight
Foreword
2018 has been a record year for the Italian non- Having progressed this far, we now see new challenges
performing exposures (NPEs)1 transaction market, and opportunities for the Italian financial system,
with announced portfolio disposals reaching almost among others:
€80b in terms of gross book value (GBV), an increase
• New asset classes, such as UTP loans and early
in excess of c.40% compared to 2017 figures.
stage NPEs, which would require a proactive
After a slow start, the last months of 2018 were management approach, specialized skills and deal
particularly active, mainly thanks to: i) the jumbo deal structures;
carried out by Banco BPM on a €7.8b bad loans
• Portfolio niches, such as leasing and small and
portfolio together with its servicing platform; ii) multi-
medium enterprises (SMEs) backed portfolios;
originator securitizations backed by mutual and
cooperative local banks; iii) the disposal of unlikely-to- • Investments in innovation and IT platforms to
pay (UTP), leasing and other bad loans portfolios by enhance operational capabilities and implement
Monte dei Paschi di Siena (MPS) for an aggregate more efficient recovery techniques, a crucial step to
amount of €3.5b; iv) the disposal to Cerberus of an keep the servicing business profitable going
unsecured bad loans portfolio with a GBV of c.€2.2b forward;
belonging to Società Gestione Crediti Delta (Sgcd). • Increasing secondary market activity, with investors
Over the last years, Italy made a considerable effort in starting to dispose part of recently acquired
reducing its NPEs from the peak level of €341b portfolios focusing on the asset classes they can
reported in December 2015 to €209b as at better manage.
September 2018 (c.-39%), but it still represents the While most of the volumes seem at this point to have
Country with the highest amount of distressed loans in been dealt with, the pipeline is still significant with over
Europe. €20b deals already ongoing and several others to hit
While lower bad loan inflows have played a relevant the market over the next few months.
role in the Italian banks' deleveraging path, portfolio In addition, focus will now be moving on new asset
disposals have been the real driver. In particular, the classes, portfolio niches and developing credit
Garanzia cartolarizzazione sofferenze (GACS) scheme management capabilities… 2019 is going to be another
on senior notes introduced in early 2016 by the Italian busy year!
Legislator has sensibly contributed to the resurgence
of the Italian securitization market, with an aggregate
GBV in excess of €50b sold so far.
The clean-up of billions of NPEs from banks' balance How can EY help?
sheets has generated significant opportunities for the The Italian NPE market is a core market for us
servicing industry and the focus will now be moving on Deleveraging is at the centre of several financial
extracting value from managed portfolios. institutions’ agendas. Transactions emerging from
Also, the effort made by competent authorities in this process are often complex and require both
order to ensure adequate NPEs provisioning levels and breadth and depth of financial expertise to deliver
lower incidence ratios on banks' loan books has value for vendors and purchasers.
progressed. On the one hand, the European Central EY teams can provide services to investors and
Bank (ECB) and the European Banking Authority (EBA) financial institutions, including:
published their guidelines to banks on the • Portfolio analysis and segmentation
management of such exposures. On the other hand,
the European Commission (EC), the Council of the EU • Data analytics
and the European Parliament recently reached a • Business modeling and valuation
provisional agreement on the prudential backstop, a • Process management
set of measures that will require banks to comply with • Tax, structuring and legal support
minimum loss coverage factors on new NPEs, a matter • NPE & Corporate Restructuring expertise
on which the ECB had also expressed its opinion
• Real estate services
earlier in 2018.
• Borrowers' analysis
The proposed sterilization of the effects deriving from
• Industry expertise & industrial approach
massive NPEs disposals from the calculation of the
loss given default (LGD) under the internal ratings-
based (IRB) framework has also created an additional
incentive for banks to undertake ambitious
deleveraging plans.
1 The terms non-performing exposures (NPEs) and non-performing loans (NPLs) are, in practice, used interchangeably. Please refer to: European Parliament, Non-performing
loans in the Banking Union – Stocktaking and challenges, October 2018.
2
1 Recent asset quality trends
The Italian NPEs market: from darkness to daylight
Key metrics
The overall stock of Italian banks' gross NPEs has recording a CAGR of approximately -16% from
sharply increased from €133b at the end of 2009 to a December 2015 to September 2018 when the same
peak of €341b as at December 2015 (CAGR of 17%), figure reached €209b. This trend is expected to
with gross bad loans (the Italian sofferenze) accounting persist in light of heavy NPEs disposals, lower
for the greatest portion (see Figure 1.1). However, this impaired loan inflows and a mild economic recovery in
upward trend has strongly reverted over the last years, the country.
Figure 1.1: Gross NPEs evolution (€b)1
341
326 324
282
264
237 141
143 125
209
195
127 99
158
133 112
89
87
79
73 183 200 200
155 165
108 125 120
60 79
2009 2010 2011 2012 2013 2014 2015 2016 2017 3Q18
Bad loans Other NPEs Total NPEs
The coverage ratio (measured as the ratio of loan loss levels and to a higher attention paid by banks to this
provisions to the total stock of loans) of NPEs increased ratio, which has started to be conceived as a source
sharply over the first six months of the year, from 50% in of competitive advantage among peers. The trend
December 2017 to 54% in June 2018. Both values are was further confirmed during the first semester of
higher than the reported European averages (45% in 2018, mainly thanks to the opportunities deriving
December 2017 vs. 46% in June 2018).2 With regard to from the implementation of IFRS 9 first time adoption
bad loans only, the coverage ratio reported an even (FTA) rules. This is crucial to ensure the enhancement
steeper increase (see Figure 1.2). The result is of asset quality and sustain growth in loan origination,
attributable both to the pressure imposed by European a necessary condition for the recovery of the
supervising authorities to increase minimum provisioning Eurozone economy.
Figure 1.2: Net bad loans and coverage ratio evolution3
67%
62%
56% 57%
54% 53% 52% 54%
48% 49%
84 89 87
80
65 64
52
37 40
27
2009 2010 2011 2012 2013 2014 2015 2016 2017 3Q18
Net bad loans Bad loans coverage ratio
1 BOI, Banks and Financial Institutions: Credit Conditions and Risk by Sector and Geographical Area – December 2018.
2 EBA, Risk dashboard – 3Q18.
3 BOI, Banks and Money: National Data – September 2018.
4
The Italian NPEs market: from darkness to daylight
The ratio of total distressed assets to loans to clients first six months of 2018, reaching 10.2% (gross of
(defined as the NPEs ratio) of the entire Italian provision) and 5.0% (net of provision) vs. 11.5% and
financial system also reported a sharp decline over the 6.1% in 2017 (see Figure 1.3 and Figure 1.4).
Figure 1.3: Gross NPEs ratio to total loans (%)1 Figure 1.4: Net NPEs ratio to total loans (%)1
11.5
10.2
4.7
4.4
6.1
5.0
3.3
6.8 2.9
5.8
2.8
2.0
2017 1H18 2017 1H18
Gross bad loans Other gross NPE Net bad loans Other net NPE
In terms of inflows, the ratio of new NPEs to the total This scenario is confirmed by the research carried out
stock of performing loans has steadily decreased over by ABI-Cerved,2 which highlights that both corporates
recent years, in line with the improved economic and SMEs are experiencing a positive economic trend.
environment and GDP recovery. The latest data from However, differences persist among sectors and
December 2017 reported 2.1% (see Figure 1.5), which geographies. RE shows greater default rates than other
is in line with average percentages observed before the industries, although a survey carried out by BOI3
pre-crisis period (i.e., 2006 and 2007). Over the same highlighted that the number of house sales increased by
period, debt repayment capacities improved among 4.1% in 4Q17 and, even if prices are sticky, the short-
firms and households, with new NPEs rates standing at term view remains positive. In terms of geographic
3.4% and 1.2% respectively. As illustrated in Figure 1.6, location, new bad loan rates of southern Italian firms
the pace of improvement has been faster for firms than are higher than those of firms located in the north and
for households. center of the country.
Figure 1.5: Indicators of credit quality (QoQ%)4 Figure 1.6: New NPEs rates (QoQ%)5
7.0 12.0
6.0
10.0
5.0
8.0
4.0
6.0
3.0
4.0
2.0
1.0 2.0
0.0 0.0
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
3Q18
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
New NPE rate New bad loan rate Households Firms Total
1 BOI, Financial Stability Report No. 2 – 2018, November 2018. (Total loans used for the NPEs ratios include loans to customers, credit intermediaries and central banks. The
aggregate is in line with that used by the ECB and differs from the one used in previous editions of the Financial Stability Report).
2 ABI-Cerved, Outlook Abi-Cerved sulle sofferenze delle imprese – December 2018
3 BOI, Economic Bulletin – April 2018.
4 BOI, Financial Stability Report, No. 1 – 2018, April 2018.
5 BOI, Financial Stability Report, No. 2 – 2018, November 2018.
5
The Italian NPEs market: from darkness to daylight
With regard to borrowers' concentration, the largest institutions (c.4%) (see Figure 1.7). Specifically, as at
share (c.77%) of gross NPEs is toward SMEs and June 2018, approximately 51% of the total stock of
corporates, while the remainder is split among Italian gross NPEs was backed by real security (see
consumers (c.19%), public administration and financial Figure 1.8).
Figure 1.7: Breakdown of gross NPEs by Figure 1.8: Gross NPEs collateralization1
counterparty1
4%
19%
49% 51%
77%
Firms Consumer Households Other Secured Unsecured
Data as at September 2018 shows that bad loans are Figure 1.9: Bad loans distribution by Italian region2
still mainly concentrated in the north of Italy, with
52% of the total amount. Central regions account for
24%, while the rest is distributed across the south
(16%) and the islands (8%) (see Figure 1.9). 2%
1%
A deeper look at regional level indicates how more 6% 22%
8%
than half of the total bad loan stock is concentrated
across four regions that are key from an industrial
Total bad loans:
10%
standpoint (i.e., Lombardy, Lazio, Emilia Romagna 2%
and Veneto). Lombardy registers the highest stake of
€120b
bad loans exposure at approximately 22%. 8% 3%
2%
3%
11%
7%
Lombardy Lazio €62b 2% 5%
2%
€26.7b
€12.8b
Emilia Romagna Veneto
6%
€12.1b €10.1b
1 BOI, Financial Stability Report, No. 2 – November 2018. The data are from non-consolidated balance sheets that do not include loans granted by financial corporations
belonging to a banking group or by foreign subsidiaries of Italian groups. The amounts correspond to the gross exposure that is collateralized or backed by personal
guarantees.
2 BOI, Banks and Financial Institutions: Credit Conditions and Risk by Sector and Geographical Area – December 2018.
6
The Italian NPEs market: from darkness to daylight
The same trend can be observed for UTP Figure 1.10: UTP distribution by Italian region1
exposures. Namely, as at September 2018, 55% of
the total UTP loans are concentrated in the north of
Italy, followed by central regions (27%), the south
(12%) and the islands (6%) (see Figure 1.10)
2%
A total of 58% of the UTP stock is concentrated in 1%
the four main regions (Lombardy, Lazio, Emilia- 4% 26%
Romagna and Veneto). 8%
As a single region, Lombardy registers the highest Total UTP:
stake of UTP exposures (26%). 10%
4%
€83b
8% 3%
2%
2%
Lombardy Lazio €48b 14%
6%
€21.2b
€11.9b
2% 4%
Emilia Romagna Veneto 1%
€7.9b €7.0b
4%
Bad loan outflows among the main Italian banks show a With regard to bad loan inflows, in 2017 the level
significant increase (€29b from 2015 to 2016 vs. remained substantially stable compared with 2016
€52b from 2016 to 2017), mainly driven by the high (€29b vs. €30b). Looking specifically at different
amount of write-offs carried out over the course of categories, inflows from the non-performing category
2017 compared with 2016 (20% vs. 9% of the initial decreased from 13% to 9% compared to the initial
panel stock). year stock.
Figure 1.11: Bad loans – inflows and outflows (€b)2
200 200
(1) (7) 5 (1) (7) 165
22 (1) (32)
(1) (15)
(5) 12
3
15
(11)
2 120
Panel outflows: Panel inflows: Panel outflows: Panel inflows:
163 €29b €30b 164 €52b €29b 141 92
Panel banks bad loans Other banks bad loans
1 BOI, Banks and Financial Institutions: Credit Conditions and Risk by Sector and Geographical Area – December 2018.
2 The
analysis is based on a sample of Italian banks representing approximately 80% of total Italian banking system gross UTP and gross bad loans exposures as at 30 September
2018.
7The Italian NPEs market: from darkness to daylight
Figure 1.12: UTP loans – inflows and outflows (€b)1
127
(6) 117
(13)
9 (6) 94
(21) (12)
8 13
17 (14) 83
5
(2) (3) 13
(4)
(6)
102 91 80 67
Panel outflows: Panel inflows: Panel outflows: Panel inflows:
€45b €34b €42b €31b
Panel banks UTP Other banks UTP
With respect to UTP, in 2017, total panel inflows UTP outflows slightly decreased in absolute terms
decreased compared with 2016 (€31b vs. €34b), with (€42b vs. €45b), but increased compared with the
lower inflows from performing and non-performing initial stock exposure (-44% vs. -46%).
categories counterbalanced by higher other inflows.
Figure 1.13: Texas ratio and Common Equity Tier 1 (CET1) capital ratio peer analysis – 3Q182
18%
Credito Valtellinese
16%
BPER
Intesa Sanpaolo
CET1 ratio (%)
14% Banco BPM
Credem
Unicredit
MPS
UBI
12%
Banca Carige
Cariparma
BP Sondrio
BNL
10%
40% 60% 80% 100% 120%
Texas ratio (%)
1 The analysis is based on a sample of Italian banks representing approximately 80% of total Italian banking system gross UTP and gross bad loans exposures as at 30 September
2018.
2 Group Consolidated Financial Reports as at 3Q18 (Cariparma as at 1H18 and BNL as at 31 December 17).
8The Italian NPEs market: from darkness to daylight
Figure 1.13 illustrates the positioning of the main troubled banks (i.e., MPS, Veneto Banca and Banca
Italian banking groups in terms of the Texas ratio and Popolare di Vicenza), but also to higher provisioning.
the CET1 ratio (phased in figures), the average of With regard to the same banks, average coverage
which is approximately 83% and 13% respectively. This ratios reached c.53% for NPEs, c.67% for bad loans
data illustrate a general improvement compared with and c.36% for UTP loans (see Figure 1.14, Figure
previous years, mainly thanks to the restructuring of 1.15 and Figure 1.16).
Figure 1.14: NPEs coverage ratio – 3Q181
Average: 52.9%
61% 58% 57% 56% 54% 54% 52% 52% 52% 51% 50%
39%
Figure 1.15: Bad loan coverage ratio – 3Q181
Average: 66.8%
74% 73% 71% 71% 69% 69% 68% 67% 65% 64%
60%
51%
Figure 1.16: UTP coverage ratio – 3Q181
46% 45%
Average: 35.9%
42%
39% 39%
36% 36% 34% 33% 33%
25% 23%
1 Group Consolidated Financial Reports as at 3Q18 (Cariparma as at 1H18 and BNL as at 31 December 17).
92 Regulatory framework: pressures and opportunities
The Italian NPEs market: from darkness to daylight
NPEs regulatory framework
In recent years, European supervisory authorities have NPEs provisioning expectations involved the following:
made a substantial effort to address the risks related
• On 15 March 2018, the ECB released the Addendum
to NPEs across Member States. The attention has
to the ECB Guidance to banks on non-performing
focused mainly on: (i) providing banks with a
loans: supervisory expectations for prudential
standardized guidance on NPEs management
provisioning of non-performing exposures (ECB
strategies and (ii) ensuring common minimum coverage
Addendum).
levels across the Banking Union (i.e., a prudential
backstop) (see Figure 2.1). With regard to the latter • On 14 March 2018, the EC presented a package of
aspect, the process has involved multiple entities and measures to tackle high NPEs in Europe. The
is now approaching its final stage as the EC, the package included the following:
Council of the EU and the EU Parliament have recently a) A proposal to amend Regulation (EU) No
reached a provisional political agreement, as described 575/2013 (Capital Requirement Regulation),
later (see Figure 2.4). introducing common minimum coverage
Key steps regarding NPEs management have been: requirements (EC Proposal)1;
• On 20 March 2017, the ECB published Guidance to b) A proposal for a directive2 on credit servicers,
banks on non-performing loans (ECB Guidance), credit purchasers and the recovery of collateral;
identifying supervisory qualitative expectations c) A blueprint3 focused on the setup of asset
regarding strategies, governance, recognition, management companies (AMCs), in accordance
impairment and collateral valuation when dealing with EU state aid rules.
with NPEs for all EU Significant banks.
With regard to point a), the EC Proposal has received
• On 11 July 2017, The Council of the EU agreed an the following amendments so far, as part of the
Action plan to tackle non-performing loans in regulatory dialogue:
Europe, calling upon competent authorities to take
appropriate measures to address NPEs in Europe. • On 31 October 2018, the Council of the EU provided
for softer calendar provisioning factors and
• On 30 January 2018, with regard to Less introduced a separate treatment for loans secured
Significant banks in Italy, the Bank of Italy (BOI) by movable or immovable collaterals (Council of the
released Linee Guida per le banche Less Significant EU Proposal).
italiane in materia di gestione di crediti deteriorati
(BOI Guidance), which also identified supervisory • On 6 December 2018, the EU Parliament's
qualitative expectations when dealing with the Committee on Economic and Monetary Affairs
management of NPEs at a national level. (ECON) provided for even less strict calendar
provisioning factors (ECON Proposal).
• On 31 October 2018, the European Banking
Authority (EBA) published Guidelines on • On 18 December 2018, the EC, the Council of the EU
management of non-performing and forborne and the EU parliament reached a provisional political
exposures (EBA Guidance), a qualitative document agreement on capital requirements for banks’ NPEs
similar to the guidance released by the ECB in (Trilogue Agreement). The agreement will now be
January 2017. This guidance applies only to banks submitted for final endorsement by EU ambassadors
with NPEs ratios above 5%. (Coreper). The Parliament and the Council of the EU
will then be called on to adopt the proposed
regulation at first reading.
Figure 2.1: NPEs regulatory framework - Timeline
EC package of measures to Trilogue Agreement
ECB Guidance BOI Guidance EBA Guidance
tackle high NPEs ratios (EC, Council of the EU,
(ECB) (BOI) (EBA)
(EC) EU Parliament)
Mar. Jul. Jan. Mar. Oct. Dec.
2017 2017 2018 2018 2018 2018
Action plan to tackle non- ECB Addendum Council of the EU Proposal ECON Proposal
performing loans in Europe
(Council of the EU) (ECB) (Council of the EU) (EU Parliament)
1 EC, Proposal for a regulation of the European Parliament and of the Council on amending Regulation EU No. 575/2013 as regards minimum loss coverage for NPEs – March 2018
2 EC, Proposal for a directive of the European Parliament and of the Council on credit servicers, credit purchasers and the recovery of collateral – 14 March 2018.
3 EC, AMC blueprint – 14 March 2018.
11The Italian NPEs market: from darkness to daylight
ECB Addendum
The Addendum introduces quantitative expectations Furthermore, it addresses the issue of supervisory
regarding the timing and the minimum level of authority recognizing a difference between its
provisioning. This increases the pressure on banks and expectations and the practice of a bank. This analysis
encourages them to adopt rapid measures to address will be part of the Supervisory Review and Evaluation
their NPEs strategy. Process (SREP) dialogue from 2021. If the reported
coverage does not meet the supervisory authority's
Banks are required to provide full coverage after two
expectation, banks will have to provide an explanation
years for unsecured exposures and after seven years
for this discrepancy. Supervisory measures will be
for secured exposures.
considered in the event that the explanation does not
Hence, the impact depends on NPEs inflow and only meet ECB expectations.
affects banks that have unsecured parts of NPEs
Finally, the Addendum, in line with ECB Guidance on
portfolios uncovered after two years or secured parts
NPEs, requires banks to review their collateral value
of NPEs uncovered after seven years.
regularly.
A key feature is that the Addendum applies to those
exposures reclassified as non-performing from 1 April
2018 and, for this reason, does not impact the legacy
stock.
Figure 2.2: NPEs calendar provisioning expectations – ECB Addendum
100% 100%
85%
70%
55%
40%
Time from classification as NPEs (years)
0 1 2 3 4 5 6 7 8 9 10
Unsecured Secured
Figure 2.2 illustrates the progressive coverage inefficacious and the exposure needs to be fully
expectation regarding secured and unsecured covered. The addendum emphasizes that it does not
exposures. With regard to the former, coverage replace any accounting or other regulatory
expectation starts at the beginning of year three. The requirements; however, banks have to close the gap
supervisory authority considers a period of seven years between supervisory expectations and accounting
since an exposure is classified as non-performing in practices. The addendum needs to be considered as
order for the bank to realize the underlying collateral. additional to the accounting provision to meet
At the end of this period, the collateral is intended to be supervisory expectation.
12The Italian NPEs market: from darkness to daylight
EC Proposal – Regulatory dialogue
In March 2018 the EC released a package of measures consumer loans and would require a written agreement
to address high NPEs in Europe. In particular, the EC between the bank and the borrower.
proposed to amend the Capital Requirement Regulation
Member states have to ensure that the creditor
(CRR), introducing a prudential backstop. The paper
organizes an asset valuation to determine the price. If
requires to set aside sufficient own resources when
parties do not agree on the appointment of an
new loans become non-performing and creates
appraiser to realize the collateral, the court is
appropriate incentives to address NPEs at an early
requested to make the appointment itself.
stage. If banks provide insufficient NPEs coverage
levels, deductions from their own funds would apply. On 31 October 2018 EU ambassadors approved the
Council's position on capital requirements applying to
At its first draft, the proposal provided by the EC
banks with NPEs on their balance sheets, which
differed from the ECB Addendum in the following
partially amended the initial EC Proposal put forward in
areas:
March 2018.
• It allowed for more time to reach full provisioning
In particular, the key differentiating factors are the
and referred to new exposures originated after
following:
March 2018.
• According to the Council's position, the new rules
• It was related to all banks from Member States.
will apply only to loans granted after the date of
• It provided for a different treatment between entry into force of the regulation, while the EC
exposures past due more than 90 days and NPEs Proposal referred to NPEs deriving from loans
deriving from other triggers (for instance, UTP originated after 14 March 2018.
loans past due less than 90 days).
• Loans past due for less than 90 days no longer
The proposal also included measures to foster the receive a special treatment compared to loans past
development of a secondary market and facilitate due more than 90 days.
collateral recovery. For instance, it proposed a new
• With regard to secured loans, full coverage
directive on credit servicers, addressing the
requirements would apply depending on the
development of a unique secondary market for NPEs
collateral being identified as movable (after seven
through the harmonization of the conditions required
years) or immovable (after nine years).
to operate in each member state.
• With regard to unsecured loans, full coverage is
The proposal provided for common standards for
required in three years instead of two.
authorization and supervision, requiring conduct rules
across the EU. The scheme would grant credit servicers On 6 December 2018, the ECON amended the EC
the right to operate throughout the EU, if they have Proposal. In particular, it maintained the same calendar
obtained the authorization in a home member state. provisioning time horizon proposed by the Council of
Meanwhile, third-country purchasers would be required the EU, but provided for less strict factors.
to use authorized EU credit servicers. On 18 December 2018, the EC, the Council of the EU
Finally, it aimed at facilitating collateral recovery by and the EU Parliament finally reached an agreement on
introducing provisions on the voluntary use of the the prudential backstop, finding a middle ground
Accelerated Extrajudicial Collateral Enforcement between previous proposals put forward by the Council
(AECE) procedure. Those provisions do not apply to of the EU and the ECON (see Figure 2.3).
Figure 2.3: NPEs calendar provisioning – Trilogue Agreement
100% 100% 100%
85%
80% 80%
70%
55%
35% 35%
25%
Time from classification as NPEs (years)
0 1 2 3 4 5 6 7 8 9 10
Secured by movable Secured by immovable
Unsecured collateral collateral
13The Italian NPEs market: from darkness to daylight
Figure 2.4: NPEs calendar provisioning – Trilogue Agreement vs ECB Addendum
Trilogue Agreement1 ECB2
(Scheduling still under discussion) Addendum
Movable Immovable
Unsecured Unsecured Secured
Collateral Collateral
0
0% 0% 0% 0% 0%
1
Time from classification as NPEs (years)
0% 0% 0% 0% 0%
2
35% 0% 0% 100% * 0%
3
100% * 25% 25% 40%
4
35% 35% 55%
5
55% 55% 70%
6
80% 70% 85%
7
100% * 80% 100% *
8
85%
9
100% *
10
* To be applied as of the first day of the year.
Figure 2.4 provides a direct comparison between the latest minimum common coverage factors required to banks by
the Trilogue (as part of the ongoing process to amend the CRR) and by the ECB.
It is worth noting that, while the schedule proposed by the ECB already applies to NPEs classified as such after 1
April 2018, the calendar proposed by EU Lawmakers will be applied to NPEs deriving from loans originated after the
date of entry into force of the amended CRR, which is expected to take place within the first semester of 2019.
1 Council of the EU, Proposal for a regulation of the European Parliament and of the Council on amending Regulation (EU) No 575/2013 as regards minimum loss coverage for non-
performing exposures - Confirmation of the final compromise text with a view to agreement– January 2019.
2 ECB, Addendum to the ECB Guidance to banks on non-performing loans: supervisory expectations for prudential provisioning – March 2018.
14The Italian NPEs market: from darkness to daylight
Trilogue Agreement vs. ECB Addendum – Qualitative comparison on calendar provisioning
Proposal for a regulation of the European
Addendum to the ECB Guidance to banks on
Parliament and of the Council on amending
non-performing loans: supervisory
Regulation (EU) No 575/2013 as regards
expectations for prudential provisioning
minimum loss coverage for NPEs
• It is still a legislative proposal, subject to • This is not a set of binding rules, although
endorsement by EU ambassadors and ECB expects banks to comply with it.
adoption by the EU Council and the EU Differences between bank practices and
Status Parliament. prudential expectations will be discussed at
least annually as part of the SREP
• If adopted, the amended CRR will represent a supervisory dialogue (from early 2021
binding rule. onward).
• As part of EU legislation, the proposal applies
Applies to • The Addendum (such as the NPEs guidance)
to all European banks (both significant and
applies only to significant banks.
less significant) subject to CRD and CRR.
• New exposures originated after the date of
• New NPEs classified as such from 1 of April
entry into force of the Regulation. If the
2018 onwards, but already originated in the
terms of an exposure are modified by the
Refers to past. Exposures classified as non-performing
institution in such a way as to increase the
and cured before 1 of April 2018 that are
institution’s exposure to the obligor, the
reclassified as non-performing after 1 of
exposure shall be treated as a newly
April 2018 are considered to be new NPEs.
originated exposure.
• Institutions shall apply specific coverage
factors, based on exposure vintage and
• The Addendum identifies fully secured
collateralization, to determine the NPEs
exposures, unsecured exposures and
used to calculate the amount of minimum
partially secured exposures. The latter
coverage levels.
should be split into two elements: the
secured portion and the unsecured portion.
• Uniform calendar both for loans past due
For fully and partially secured exposures,
more than 90 days and other NPEs
Type of rule banks have to review the collateral value
regularly, in line with the NPEs guidance.
• In case of purchased exposures, the calendar
should start from the date on which the NPE
• There is no distinction between UTP and past
has originally been classified as non-
due exposures.
performing
• Differences from prudential expectations are
• Institutions have to determine the amount of
reflected in the SREP (Pillar 2) decision.
insufficient coverage for NPEs to be directly
deducted from (Pillar 1) CET1 capital.
• There will be full provisioning within three
• There will be full provisioning within two
years for unsecured exposures, seven years
Full coverage years for unsecured exposures, and within
for exposures secured by movable collaterals
seven years for secured exposures
and nine years for exposures secured by
(progressively, starting from the third year).
immovable collaterals.
Opportunities Pressures
• Challenging expectations on loan
• Secondary market development and increased provisioning and potential stress on capital
volumes in loan portfolio sales adequacy
• Faster cleanup of banks' balance sheets • Potential downward pressure on loan
portfolio prices due to increased supply
• Development of a pan-European servicing
market with common rules • Potential negative effects on loans
(especially unsecured) granted to
households and SMEs
15The Italian NPEs market: from darkness to daylight
Guidance on management of NPEs for less significant institutions (LSIs)
In January 2018, BOI released a guidelines that • Formalize credit valuation policies, including
Italy's LSIs are expected to implement in those on write-offs, and the definition of
managing their NPEs. criteria for impairments.
The guidelines outlines a comprehensive package • Define and formalize procedures that
of measures, processes and rules of conduct guarantee accurate valuation of RE assets, by
that less significant banks should include in NPEs using independent experts to assess the value
management, in line with the guidance published of RE collateral.
by the ECB and the EBA. • Implement and maintain an adequate
According to the guidelines, LSIs are expected to: database to manage NPEs data and verify
• Adopt a formalized strategy for optimizing NPEs status.
NPEs management by maximizing the current The short-term plan for banks may include:
values of recoveries. • Reviewing the target operating model.
• Integrate the strategy with an NPEs • Identifying the best mix of strategies by
governance and operational framework, by combining different actions to maximize the
involving the board of directors in defining current values of recoveries (e.g., dedicated
and monitoring the management of NPEs internal division, servicer, portfolio disposal,
(in addition, banks are requested to adopt securitization and creation of a bad company).
provisions and safeguards aimed at managing
• Providing the supervisor with a report on the
NPEs promptly and appropriately, by avoiding
NPEs reduction plan.
conflicts of interest).
In order to assess the suitability of the various
• Maximize efficiency for forbearance
strategies, the guidelines indicate that it is crucial
measures, swiftly identifying the best solution
to consider the indirect costs of keeping NPEs in
for each exposure.
banks’ portfolios, by implementing a process of
• Formalize criteria for implementing the monitoring the NPEs’ management-related costs.
relevant supervisory provisions on loan
classification (to this end, banks are
requested to identify a list of indicators to
classify loans at default).
ECB announces further steps in supervisory approach to stock of NPLs
In July 2018, the ECB released a note • Bank-specific expectations are guided by
announcing further steps in its supervisory individual banks’ current NPEs ratio and main
approach to addressing the stock of NPEs in the financial features in a consistent way across
euro area. comparable banks.
It anticipates the following interventions: Under this approach, the ECB will further engage
• Bank-specific supervisory expectations will be with each bank to define its supervisory
set for the provisioning of NPEs. expectations.
• The aim is to achieve the same coverage of
NPL stock and flow over the medium term.
16The Italian NPEs market: from darkness to daylight
IFRS 9 first time adoption
IFRS 9 implementation has been a real game changer Figure 2.5: Transitional period factors
mainly thanks to the first time adoption which allowed
banks to increased coverage with a phased impacts on
100%
capital.
Following the issuance of the Basel Committee on 75%
Banking Supervision (BCBS) standard on
29 March 2017, the relevant European institutions 50%
have indeed finalized the transitional arrangements for Add back
25%
the regulatory treatment of accounting provisions
within the EU. This is to address the implementation of 0%
IFRS 9 Financial Instruments and other expected credit 2018 2019 2020 2021 2022 2023
loss (ECL) frameworks.
The process was fast-tracked to help mitigate the This means that on day one, the IFRS 9 provision is
impact of IFRS 9 standards on EU banks’ capital and compared with the International Accounting Standards
ability to lend.1 Following this, the transitional (IAS) 39 provision as at the previous reporting period
arrangements were incorporated into European end. The delta is then added back over the transitional
legislation on 27 December 2017, via publication in the period, subject to the percentage factors of 95%, 85%,
Official Journal of the European Union (OJEU).The 70%, 50% and 25%.
transitional arrangements are applicable from 1
January 2018 via the CRR Article 473(a). On subsequent reporting period end dates, the stock of
IFRS 9 stage 1 and stage 2 provisions can be compared
The BCBS recognizes that the IFRS 9 ECL model will with the stock of IFRS 9 stage 1 and stage 2 provisions
likely lead to higher provisions, noting that there may as at day one.
be a capital shock and firms may need to rebuild their
capital resources. A firm can then choose for the difference to be added
back, again subject to the percentage threshold.
Additionally, the BCBS notes that there has been no Crucially, this allows for the reduction in the volatility of
conclusion on the permanent interaction between ECL regulatory capital experienced in subsequent years.
accounting and the prudential regime – necessitating This approach makes the assumption that all stage 1
transitional arrangements. and stage 2 provisions are new provisions under IFRS 9.
During 2017, the European Council, European While this may not be a true reflection of the ECL stock,
Parliament and EC have worked to finalize the interim it permits a firm to compare figures under one
approach within the EU, and have incorporated the accounting framework, and not have to recalculate the
transitional arrangements into European legislation IAS 39 position at each reporting period end.
from 1 January 2018.
This reduces the operational complexity compared with
Focus on transitional arrangements a truly dynamic approach, as originally proposed.
The BCBS standard provides jurisdictions with the The phase-in proposed by the regulator is applicable not
option to choose whether to apply a transitional only for loans and receivables impaired under a hold to
arrangement for the regulatory capital impact of collect scenario but also for loans and receivables under
moving to an ECL model over a period of no more than alternative workout strategies as disposal, unless
five years. If elected, the design of the approach is the portfolios are pre-identified.
jurisdiction’s responsibility, subject to a number of
rules, including the calculation method – either a static The regulation requires a firm to inform its competent
or a dynamic approach. authority of its decision to use the arrangements by
1 February 2018. Note that a firm is allowed (but not
These are defined as follows: required) to apply the transitional rule. Additionally, if a
• A static approach: calculating the transitional firm does not initially opt in to the transitional
adjustment just once, at the effective date of the arrangements, it can elect to reverse this decision
transition to ECL accounting. during the five-year period (with the permission of its
competent authority).
• A dynamic approach: recalculating the transitional
adjustment periodically to reflect the evolution of a Finally, there is a requirement for full disclosure of the
firm’s ECL provisions within the transition period. fully loaded and transitional amounts for own funds,
capital ratios and leverage ratios in Pillar 3 reports.
The final regulation provides for a five-year transitional
period from 1 January 2018 (or an entity’s relevant day To govern this, the EBA issued the final guidelines on
one). uniform disclosures under Article 473a of Regulation
(EU) No 575/2013 with regard to the transitional
While there is no full neutralization in year one, it period for mitigating the impact of the introduction of
progressively decreases to zero over five years, starting IFRS 9 on own funds on 12 January 2018.
at 95% and finishing at 25%, as shown in Figure 2.5.
The guidelines are applicable both for firms that elect to
While it is a dynamic approach, with periodic use the transitional arrangements and those that decide
recalculations, some high-level assumptions have been not to make use of them to ensure market
made to reduce the operational complexity in creating a transparency.
modified-dynamic approach.
1 EC, Banking Reform EU: EU reaches agreement on first key measures – 25 October 2017.
173 Update on the Italian real estate market
The Italian NPE market: from darkness to daylight
Investment market overview
Base on our preliminary figures about commercial real investors which are reviewing their investment plans
estate investment market, 2018 recorded c.€8.5b of but still remain focus on the Country.
direct investments in Italy. Such result represents a
Among the key transactions related to the commercial
reduction of c.25% compared to the previous year.
real estate market and completed in 2018, it is worth
In particular, the investment volumes recorded in 3Q18 to be mentioned the sale of Valdichiana Outlet Village
are 9% lower than those recorded in 3Q17. Additionally, in Tuscany for €137.7m, Centro Sicilia Shopping
investment volumes registered in 2Q18 (€1.65b) have Center in Catania (Sicily) for €140.0m and the
a negative trend when compared with the same period acquisition by ENPAM of two Grade A office properties
of 2017 (€4.5b). in Rome from BNL, via a dedicated real estate
investment fund.
The investment volume observed in our Country in the
last financial year is the result of, to some extent, Investments in the hospitality sector amounted to more
opposite forces; among other it is our view that the than €500m, creating a solid market for the investors
main factors that have contributed to such results are: active in the sector.
(i) lack of core products in main markets and, in any
In terms of capital source breakdown, excluding 2016,
case, investment demand higher compared to the
from 2013, foreign investors accounted for more than
available product in core location suitable for
60% of the total investment volume (3Q18: 75%),
investment purposes; (ii) investment focus
which demonstrates the high attractiveness of the
concentrated in main and core markets (i.e. Milan and in
Italian RE market for international investors.
some extend Rome), but investors still reluctant to
consider secondary locations, with the exclusion of In terms of returns and processes, we observed a yield
investment in the logistic and retail sub sectors; (iii) compression for prime assets pushed by competitive
some concerns related to the political tension with the acquisition processes. The retail sector grew up to
EU, the still uncertain economic growth and outlook of c.39% respect to the past year (27.0% in 2017) while
the Country and a potential less favorable interest rate the weight of traded volumes in the office sector
condition. dropped substantially due to lack of available quality
buildings in prime locations.
In any case, although these external factors, Italy
demonstrates a good attractiveness for international This is also predicted in the 2019 forecasts.
Figure 3.1: RE investment volumes in Italy 2007–18 (€m)1
11,100
9,600
8,500
7,700
7,200
5,200
4,600 4,200 4,500
4,000 3,700
2,800
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
*2018: Preliminary figures based on internal statistics on Commercial Real Estate Investment Market, not yet consolidated.
Transaction
• Figure 3.1 shows the trend of direct investments in • The comparison between investment volumes of
the Italian RE market in the period between 2007 the last three years and the 11-year average from
and 2018. 2007 to 2017 shows an increasing trend of
investments well above the average (to be
• Results show a growing trend of capital flow that exceeded in 2018 too).
started in 2012 and was then confirmed in the
following years, with a 2012–17 positive CAGR of • During 3Q18, the office sector recorded a sharp
about 31%. In 2017, the total volume of investments drop of approximately 42% compared to 3Q17.
reached a value of approximately €11b, the highest
• In 2018, the total investment volumes reached a
since 2007.
value €8.5b with a marked increase in the retail
sector.
1 Source: RCA Analytics.
19The Italian NPE market: from darkness to daylight
Direct investment and sectors breakdown
The RE asset class that over the last three years • When comparing investments in Europe with those
recorded the highest interest in both Italy and Europe in Italy, it must be noted that in Europe in 2017,
was office, which, on the contrary, in 3Q18, reported an c.13% of market share was related to the residential
important reduction, which was overtaken by asset class. Investment opportunities in Italy will
investments in retail asset class. In Italy, CAA acquired a arise regarding this asset class, according to new
Telecom Italia property portfolio, and DeA Capital and investors’ strategies.
Enpam purchased the Edison office in Milan and
• In 2017, the office investment share accounted for
completed a sale and leaseback transaction of an Edison
c.39% in Europe vs. c.62% in Italy.
RE asset portfolio.
Figure 3.2: Breakdown of investments per asset class (€m)
6,000
5,000
4,000
3,000
2,000
1,000
-
2014 2015 2016 2017 2018*
Retail Office Industrial and logistics Hotel Development Mixed Other Residential
*2018 data pertains to 3Q18
Figure 3.3: Investments per asset use in Figure 3.4: Investments per asset use in Europe
Italy in 3Q181 in 3Q181
Development Others
Others
Hotel 1% 3%
10%
9%
Industrial
and logistics Office
9% 29%
Retail Residential
39% 13%
Hotel
9%
Retail
17%
Office Industrial
33% and logistics
28%
1 Source: RCA Analytics.
20The Italian NPE market: from darkness to daylight
Main investors in Italy and in Europe
The top 10 investors in both 2017 and the first three differentiated rationale and drivers for investment.
quarters of 2018, and their investments volume in Italy Vonovia SE is the most active investor across Europe,
and Europe, are shown in the tables below. having they acquired large RE portfolios in a plurality
The data refers to asset acquisitions and the share of nations.
dealing that occurred throughout the period. It is worth Vonovia SE made its way to the top of the list (see
mentioning that, in 2017, the top two investors were Figure 3.7) through the acquisition of a huge amount
domestic (see Figure 3.5) while, during the first three of residential properties mostly located in northern
quarters of 2018, they were international. Europe (about €68b).
The type of investors appears heterogeneous for the Blackstone, on the other hand, returned in the upper
first 10 positions in both 2017 and 2018. This reflects part of the list mostly investing in industrial properties
a wide interest from a wide variety of investors with (€1.8b).
Figure 3.5: Top 10 investors per volume in Italy in 20171
Company Country Investor type Total (€m)
DeA Capital RE SGR Italy Equity fund 1,026
Kryalos AM Italy Investment manager 843
Crédit Agricole France Bank 743
York Capital US Equity fund 717
CIC China Sovereign wealth fund 663
EDF France Corporate 617
Feidos Italy Investment manager 550
CBRE Global Investors US Investment manager 321
Amundi France Investment manager 298
ENPAM Italy Pension fund 266
Figure 3.6: Top 10 investors per volume in Italy in 1Q18, 2Q18 and 3Q181
Company Country Investor type Total (€m)
Kryalos AM Italy Investment manager 519
BNP Paribas France Bank 358
Amundi France Investment manager 210
CBRE Global Investors US Investment manager 204
Savills IM UK Investment manager 198
Partners Group Switzerland Investment manager 195
Swiss Life AM Switzerland Investment manager 184
IGD Siiq Italy RE operating company 181
AXA Group France Insurance 161
GWM Group Luxembourg Investment manager 159
Unibail-Rodamco-Westfield France RE investment trust 150
Coima SGR Italy Investment manager 148
Figure 3.7: Top 10 investors per volume in Europe in 3Q181
Company Country Investor type Total (€m)
Vonovia SE Germany RE operating company 7,100
Blackstone US Equity fund 5,084
Cerberus US Equity fund 4,060
DekaBank Germany Bank 3,174
CBRE Global Investors US Investment manager 2,850
BNP Paribas France Bank 2,367
Hines US Investment manager 2,323
Aroundtown Germany Investment manager 2,263
Union Investment Germany Open fund 2,193
Invesco US Investment manager 2,120
1 Source: RCA Analytics.
21The Italian NPE market: from darkness to daylight
Breakdown of Italian Investment by region and city
Over the last four years, Lombardy has been the region Comparing 2017 and 2018, the two most attractive
with the greatest capital inflows (although the relative cities appear to be Milan and Rome. During the first
portion is lowering). In 2014, it attracted c.68% of total three quarters of 2018, two main transactions were
investments; in 2015, 2016 and 2017, its portion also registered in the area of Misterbianco (Catania)
decreased to c.51%, c.36% and c.14% respectively. This and Vignate (Milan), the first related to the sale of
was driven by the fact that, in 2017, numerous Centro Sicilia Shopping Centre and the second to
portfolios with properties spread all over Italy were Acquario Vignate Shopping Centre.
sold. It must be noted that, in 2018, there was an
Milan was the city with the highest volumes traded at
inversion of the trend, with the Lombardy portion
both regional and national levels. Investments
increasing to c.49% of the total.
accounted for c.47% of the total domestic inflows in
Lazio is the second-highest performing region in terms 2015, c.32% in 2016, c.29% in 2017 and c.48% in
of capital inflows. In 2014, it attracted c.17% of 3Q18.
domestic capital flows. This increased to c.21% in 2015
After Milan, Rome recorded the highest volumes traded
and c.24% in 2016, then decreased to c.15% in 2017.
in its region (Lazio). The investments amounted to
Similar to Lombardy, in the first three quarters of
c.21% of the total inflows in 2015, c.20% in 2016,
2018, invested capital flows in Lazio increased to
c.15% in 2017 and c.9% in 3Q18.
c.14%.
Figure 3.9 shows the investment breakdown by Italian
city.
Figure 3.8: Breakdown of Italian investment by region1
2017 1Q18, 2Q18 and 3Q18
11%
15%
7%
14% 7%
49%
2%
12%
65% 2%
2%
14%
Lazio Lombardy Piedmont Lombardy Lazio Sicily
Emilia-Romagna Veneto Others Tuscany Apulia Others
Figure 3.9: Breakdown of Italian Investment by city1
2017 1Q18, 2Q18 and 3Q18
29% 31%
48%
55%
4%
15%
8%
1%
1% 9%
Milan Rome Bologna Florence Others Milan Rome Palermo Catania Others
1 Source: RCA Analytics.
22The Italian NPE market: from darkness to daylight
Residential RE market trend
The residential market, after a long and crippling crisis Based on our preliminary estimates, we expect level of
that started in 2008, seems to be on the road to residential transactions to express c.5% growth
recovery, even if in 2017 and 2018 growth rates were compared to 2017.
not so high compared to the market expectations.
A focus on some of the most important cities shows
In 2016, the number of residential units sold, also different trends compared to the national average.
known as NNT* (as recorded by Agenzia delle Entrate,
Owing to its size, Rome has reaffirmed its relevance in
the Italian tax authority), reached around 530,000
terms of overall number of residential transactions
units (+18.9% vs. the previous year).
(31,000 NNT). Furthermore, it seems to be a more
In 2017, there were 543,000 residential transactions, resilient market.
recording a growth of about 3% compared to 2016.
Milan's performance was in line with the national
While the number of transactions registered in 2017 is
average between 2000 and 2012, but has kept
considerably lower than the top level recorded in Italy
improving since 2013 (c.+8% compared with the
during 2004 (about 900,000), it is the third year in a
previous year's NNT).
row of constant growth.
2017 also registered positive increases in NNTs in
2017 figures are aligned to the long-term average
Turin and Naples, with a growth of 4.9% and 7.4%
recorded in Italy since 1958 but are still far from the
respectively compared with the previous year, but still
peak based on the linear trend line over the same
below the figure for 2000 and 50.0% lower than the
historical period.
peak of the market recorded in 2003.
*NNT: normalized number of transactions.
Figure 3.10: Residential transactions evolution in Italy1 : 1958–2017
1,000,000
900,000
800,000
700,000
600,000
500,000
400,000
300,000
200,000
100,000
0
1958
1960
1962
1964
1966
1968
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
Figure 3.11: Residential transactions and GDP correlation
The overall health of the economy generally affects the RE values and property demand. This is measured by
indicators such as manufacturing activity, price of goods and labor market, even if GDP is the most frequent
parameter assumed as reference. The reason for this relationship is relatively straightforward: over the time, GDP
growth should lead to improving occupier demand and, in turn, higher rents and capital values, which drive property
returns. The historical comparison of residential transactions’ trend and GDP variation in Italy shows a certain
correlation. The GDP growth expected in the period 2018–20, based on BOI forecast, could be a positive catalyst for
near future growth.
1,000,000 6%
900,000
4%
800,000
700,000 2%
600,000 0%
500,000
400,000 -2%
300,000 -4%
200,000
-6%
100,000
0 -8%
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
Residential transactions (n) GDP variation (%)
1 EY analysis on Agenzia delle Entrate, Scenari Immobiliari and Nomisma data.
23The Italian NPE market: from darkness to daylight
Figure 3.12: Residential transactions in Italy – a comparison among main cities1
Rome Rome
80,000 140
The historical series of NNT for residential properties in
70,000
Rome in the period 2015–17, presents an average of 120
60,000
27,914 transactions, with a growth trend over the last 100
50,000
three years (2017 vs. 2015: +13.8%). 80
40,000
60
In 2017, the change in the NNT in Rome (equal to 30,000
+3.0%) was lower than the variation recorded by the 20,000
40
provincial data (+3.1%), the variation recorded by the 10,000 20
regional data (+3.2%) and the variation recorded by the 0 -
national data (+4.9%).
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
Rome – residential transactions Italia index Rome index
NNT 2017 – Distribution of transactions
by size in Rome
16,000
12,890 The graph on the left shows the number of transactions
12,000 by property size in the city of Rome in 2017. It is noted
8,516 that 41.4% of the units sold are of small to medium size
8,000
(50–85 sqm), followed by the units of average size (85–
115 sqm) with about 27.4% of transactions. The
3,828 number of transactions of the medium-large size (115–
4,000 2,944 2,953
145 sqm) was also very important (12.3%).
0
Up to 50 50–85 85–115 115–145 Over 145
sqm sqm sqm sqm sqm
Milan
Milan
The historical series of the NNT of properties for the use 80,000 140
of residential of Milan in the period 2015–17 presents 70,000 120
an average of 18,921 transactions, with a net growth in 60,000
100
the last three years (2017 vs. 2015: +31.4%). 50,000
80
40,000
In 2017, the change in the number of transactions in 60
30,000
Milan (equal to +8.1%) was higher than the variation 40
20,000
recorded by the provincial data (+6.6%), the variation
10,000 20
recorded by the regional data (+5.5%) and the variation
0 -
recorded by the national data (+4.9%).
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
Milan – residential transactions Italia index Milan index
NNT 2017 – Distribution of transactions
by size in Milan
12,000
10,285
10,000
The graph on the left shows the number of transactions
8,000
by property size in the city of Milan in 2017. It is noted
6,000 5,041 that 43.4% of the units sold are of small to medium size
4,417 (50–85 sqm), followed by the units of average size (85–
4,000 115 sqm) with about 21.3% of transactions. The
2,107 1,857 number of transactions of the small size (up to 50 sqm)
2,000 was also very important (19.6%).
0
Up to 50 50–85 85–115 115–145 Over 145
sqm sqm sqm sqm sqm
1 EY analysis on Agenzia delle Entrate, Scenari Immobiliari and Nomisma data.
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