19 Dec 2007, Alexander Campbell, Risk magazine
Italease is the first institution in Italy to plan repurchase deals as part of a securitisation. "We're confident that in six months' time we will be able to use these deals with the central bank or on the open market – with the Goldman Sachs repo desk, for example," said Stefano Rossi, the bank's treasury and finance manager.
Italease was unable to put the portfolio into a normal securitisation, Rossi said, as it was too concentrated. "You need a large number of small components for a standard securitisation. These are large positions - several are larger than 1% of the portfolio, which is the normal limit."
However, the bank's funding is still heavily reliant on Italease's main shareholders, said analyst Christian Scarafia at rating agency Fitch. "At the end of September, €3.98 billion of interbank deposits were outstanding from shareholders, equal to 54% of total interbank deposits," he said.
Fitch rates Italease with a BBB- long-term issuer default rating, reflecting its view that "ongoing support from the main shareholders will continue until its current situation has stabilised", Scarafia said. Its individual rating of D/E was raised only this month from E after the completion of the first phase of a rights issue. An E rating implies "very serious problems, which either require or are likely to require external support".
"The next step is that it has to show it can generate adequate revenue from its core businesses," Scarafia added.
Italease's entire board was forced to resign earlier this year by the Bank of Italy after it revealed big losses on structured interest rate derivatives.