Italian Bank UniCredit Seeks to Sell Leasing Business

Milan-based investment banker UniCredit is weighing offers from a series of suitors who want to take over its leasing operations.

As Reuters reported Tuesday (Jan. 25), sources close to the matter say the bidders include private equity firms Bain and Christofferson Robb & Co along with Italy’s Alba Leasing, which is owned by rival banks like Banco BPM and BPER.

The news outlet noted that this is happening amid UniCredit CEO Andrea Orcel’s decision to focus on operations that don’t tie up as much capital. Last month, he pledged to produce enough capital to give 16 billion euros ($18 billion) back to investors over the next two years.

Orcel has said his bank would back businesses that would help it maximize return on allocated capital. The leasing business doesn’t fall into that category.

According to Reuters, UniCredit Leasing has about 10 billion euros in credit on its books, a figure that includes about 1 billion euros of non-performing debt. Much of the portfolio — more than two-thirds — comes from real estate leasing contracts, the rest relating to equipment.

It’s the equipment side of things that has industry players most interested, sources told Reuters. None of the bids were for the entire business, and UniCredit may end up divesting just part of its leasing operation, depending on the size of the loss it could manage.

The report says some private equity firms are interested in UniCredit’s loan portfolio. But the rate of return on those loans is a little over 1%, which means the bank would suffer a major loss in offloading this side of its business.

Read more: UniCredit Teams With JPMorgan on SWIFT Go for Cross-Border Payments

Last year, UniCredit teamed up with J.P. Morgan to advance the SWIFT Go project, which gives individuals and businesses the ability to make cross-border payments with full transparency and increased security.

The partnership also gave UniCredit’s customers access to J.P. Morgan’s proprietary PayDirect solution, which can be tapped for payments up to $10,000 to any JPMorgan Chase branch in the U.S.