ROME, November 20 (Reuters) – Italy will use its upcoming presidency of the Group of 20 major global economies to try to secure further debt relief for African countries, a senior Italian diplomat said on Friday.
Italy takes over the G20’s annual rotating presidency on December 1 and will build on a deal reached by major international creditors in April aimed at easing debt repayments for the world’s poorest countries.
“Any subsequent steps, because of the diversity of the G20 membership, will not be easy, but we will work to achieve good results,” said Pietro Benassi, diplomatic adviser to Prime Minister Giuseppe Conte.
Benassi, who is helping shape Italy’s G20 agenda, said at the conference that “outreach to Africa” would be one of the priorities. “Debt relief must represent one of the outcomes of the G20 and we will do our best to get it,” he said.
Policymakers, analysts and investors have warned that African countries face a looming debt crisis and will need more long-term assistance than the latest G20 debt plans offer.
About 40% of sub-Saharan African nations are at or are at risk of experiencing debt difficulties even before this year, while Zambia became the continent’s first pandemic-era default last Friday. (Reporting by Crispian Balmer; Editing by Giles Elgood)
MILAN, Nov 18 (Reuters) – Italy plans to expand its existing guarantee scheme for bank loans in a move that will help the country’s lenders deal with any future defaults triggered by the pandemic, a draft 2021 budget shows.
Italian banks have raised concerns about the combined effects of obligations to write down non-performing loans in full over certain years when combined with a more stringent definition of an imminent kicking default and the problems that businesses hit by the virus will face once weaned from an emergency support scheme.
This obligation is known as the “provision of a calendar.”
The draft budget was extended to mid-2021, the existing debt moratorium and guarantee scheme that Italy implemented during the first wave of COVID-19 in the spring to help companies increase new debt.
In addition, it allows larger companies, other than small ones, to take advantage of state guarantees for their pre-pandemic debt if the amount is increased by at least a quarter and the maturity period is extended or the costs are reduced.
“If this proposal becomes law, banks will receive incentives to refinance corporate debt, extend maturities and add fresh liquidity. It will buy time for companies to try to recover as the economic cycle improves, ”said Gregorio Consoli, a partner at the Italian law firm Chiomenti.
“This step will also help banks with their worrying calendar provisions, because the ECB will consider guarantees in arranging provisions for loan losses,” he added.
“This will effectively allow lenders to maintain a coverage ratio of 0% for the first seven years after loans start to deteriorate,” Consoli said.
The move comes under a 200 billion euro ($ 238 billion) liquidity scheme introduced in April that is run by export agency SACE, an affiliate of state lender CDP.
Approved by the cabinet on Monday, the budget will go to parliament this week, for approval by both houses on December 31.
Italian banks are concerned about providing a calendar because an inefficient judicial system makes it difficult to recover unpaid loans.
A study by Cherry Bit, a company that applies artificial intelligence to problem loans, this week showed Italian courts face 11,000 new bankruptcy procedures a year while 83,000 are still waiting. ($ 1 = 0.8415 euros) (Reporting by Valentina Za and Giuseppe Fonte; Editing by Toby Chopra)
MILAN, November 17 (Reuters) – International investors will avoid disrupted Italian bank loans until prices drop to reflect the higher risks associated with the COVID-19 crisis, said the head of the Italian branch of Norway’s Axactor.
The Oslo-registered company invests in and manages bad loans in six European countries.
In comments to Reuters, Axactor Italia CEO Antonio Cataneo said the pandemic has forced loan collectors to revise projections to reflect the fact that it will take longer to recover loans and may be more difficult given the downturn caused by the health care emergency.
After the lull caused by the first wave of the pandemic, market activity in Italy increased, with bad borrowing prices supported by strong domestic demand. Cataneo said the second wave would leave a deeper imprint.
“Until September … the deal is closed at a price that is not much different from the situation before COVID,” he said.
“The risks associated with the pandemic at the time have not been fully accounted for. We hope that these risks will be included in the portfolio price in the future.”
The price investors are willing to pay in bad debts depends on the costs they bear to secure the financing and their targeted returns, which increase in proportion to the perceived risk.
International investors like Axactor face higher funding costs than many Italian rivals such as Banca IFIS which, as a bank, can take advantage of cheaper liquidity.
Cataneo said Axactor and other international rivals had decided not to bid on some of Italy’s bad loan portfolios because the prices they were prepared to offer were below those paid by the Italian bidders.
“I’m not sure how long the market can go on relying solely on domestic investors, even in a market like Italy where the presence of local investors is strong,” he said.
“At some point, prices have to go down for international players to have confidence to come back.” (Reporting by Valentina Za; Editing by Kirsten Donovan)
* Targeting about a third of the domestic market share
* Will end a decade-long corporate travel arms race
* Introducing new food purchasing options in economy class (Adds administrative details, comments Qantas CEO)
SYDNEY, Nov 18 (Reuters) – Virgin Australia will position itself as a mid-market carrier targeting about a third of the domestic aviation market share under US private equity firm Bain Capital, the airline’s new chief executive said on Wednesday. .
Virgin’s shift from being a full-service airline will mark the end of a decade-long arms race with Qantas Airways Ltd for corporate travelers involving luxurious airport lounges, celebrity chefs and reclining business seats on longer domestic flights.
“Australia already has low-cost carriers and traditional, full-service airlines, and neither would we,” Virgin Australia Chief Executive Jayne Hrdlicka said in a statement, referring to Qantas and its low-cost subsidiary Jetstar.
“Virgin Australia will be an attractive mid-range airline for customers who want good airfare and better service.”
The country’s second-largest airline said it would introduce a new food-purchase option in economy class but would retain business class seats and airport lounges in major cities. It will also continue to include checked baggage at its economy class fare. Wi-Fi and in-flight entertainment are still under review.
Virgin was removed from the stock exchange on Tuesday after Bain’s buyout closed, allowing it to exit voluntary administration.
Qantas Chief Executive Alan Joyce said he expected Virgin to appear “leaner and ruthless” given it was able to amend its charter terms as part of administrative proceedings, Australia’s closest equivalent to the US Chapter 11 bankruptcy regime.
Qantas has announced plans to achieve A $ 1 billion ($ 729.8 million) annual savings by financial year 2023 to help contain the coronavirus pandemic.
Analysts said Virgin’s market decline would give Qantas room to cut product costs or introduce fees at lower rates while maintaining its premium market position.
“We have no intention of changing Qantas products other than what we’ve been doing around COVID-19,” Joyce said in the Aviation Week webinar.
$ 1 = 1.3702 Australian dollars Report by Jamie Freed; Edited by Sam Holmes and Stephen Coates
SYDNEY (Reuters) – Westpac Banking Corp. WBC.AX Its rivals are lagging behind as a dated system forces it to spend, rather than save, while profit margins were eroded by record low interest rates, investors said after Australia’s biggest bank issued revenue and trade renewals.
Extensive organization, aging software, and convoluted procedures have been Westpac’s main enemies, investors said, leading to heavy fines for violating anti-money laundering laws and loss of market share in the mortgage, its main product.
That has made the 203-year-old lender prioritize expensive restructuring and system upgrades over loan growth.
Cheap Westpac stock makes it attractive to investors. However, few are convinced of the rapid rise in prices given the central bank has cut interest rates three times to help the post-pandemic economic recovery, squeezing bank interest margins.
“The question the market is asking itself is: is it cheap enough?” said portfolio manager Matthew Ryland at Greencape Capital, an investor in all of Australia’s “Big Four” banks.
Westpac has assets of more than A $ 900 billion ($ 650 billion) and was for many years the second largest bank by market value. After seeing its share price drop 28% since the breach surfaced a year ago, it was passed last month by National Australia Bank Ltd (NAB) NAB.AX.
The bank’s shares are now valued at 0.89 times their book value, the second lowest of the Big Four, according to data from Refinitiv Eikon. In comparison, several Commonwealth Bank of Australia (CBA) leaders CBA.AX is 1.7.
“Westpac has had a bad year, but there could be some gains relative to other banks,” said Hugh Dive, chief investment officer at Atlas Funds Management, which also owns Westpac shares.
In its annual earnings report, Westpac said it was working to restore market share in mortgages after caution was combined with the inefficiency of sending prospective borrowers elsewhere.
New management since then and a cost-focused strategy scheduled for May have also given hope for a revival, albeit gradually.
“Westpac is 12 to 18 months behind peers when it comes to gaining control of the cost-out program,” said Ryland of Greencape.
Westpac declined to comment.
UBS, which has a “buy” recommendation on Westpac shares, in a client note said all banks should spend money on IT, compliance and other business enhancements because of COVID-19, but Westpac’s cost challenges are greater.
The average recommendation for the Westpac stock of 14 analysts is 2.5, of which 2 is “buy”, 3 is “hold” and 4 is “sell”.
Their top choice is NAV at 2 followed by Australia and New Zealand Banking Group Ltd ANZ.AX at 2.1, Refinitiv Eikon data show.
CBA, widely considered to have better cost control and IT infrastructure, was rated 3.4, reflecting its higher price tag.
($ 1 = 1.3845 Australian dollars)
Reporting by Paulina Duran in Sydney; Edited by Christopher Cushing