STORY CONTINUES BELOW THESE SALTWIRE VIDEOSMILAN - A law proposed by the Italian prime minister's party to help those in arrears risks damaging the country's non-performing loan market, which played a crucial role in helping banks offload sour debt, a senior banker active in the sector said on Friday.
It aims to give borrowers the right to repay the original loan at a price equivalent to the ratio between the loan's gross nominal value and the average portfolio price, plus a 20% premium. Such a rule would provide a 20% return for the loan's seller, but against a price that is an average of the loan pool when the value of individual loans within a portfolio can vary significantly.
The measure would give borrowers the chance to cancel the debt once it has been sold, spending less than the cost of repaying its original value.