US asset manager Fortress and its affiliates including Eurocastle Investment have reached an agreement to acquire Italian bank UniCredit's non-performing loan platform as well as a €2.4 bn nominally-valued non-performing loan portfolio for a total of €530 mln.

US asset manager Fortress and its affiliates including Eurocastle Investment have reached an agreement to acquire Italian bank UniCredit's non-performing loan platform as well as a €2.4 bn nominally-valued non-performing loan portfolio for a total of €530 mln.

Although the transaction volume was not disclosed, Fortress is believed to be forking out around €230 mln for the package of secured and unsecured loans, representing a 90% discount to face value, while another €300 mln is being paid for the bad loan unit, UCCMB. The purchase of the loan platform includes the takeover of the group’s workforce of 600.

In addition to the acquisition of the NPL package and the servicer, the transaction includes a 10-year servicing contract on all of UniCredit's NPLs with balances below €1 mln.

UniCredit Credit Management Bank (UCCMB) was put up for sale at the beginning of last year as the Italian banking giant sought to strengthen its balance sheet and free funds for new lending.

New York-based Fortress Group launched an offer in April last year through a joint venture with Prelios. The partners entered exclusive talks in October and were expected to close the deal before year-end or shortly thereafter, to allow Unicredit to include the sale in its 2014 annual figures.

Unicredit published preliminary 2014 figures on Wednesday.

‘The sale of the portfolio of non-performing loans is in line with UniCredit’s objective of accelerating the wind-down of its non-core business in Italy, contributing to the further de-risking of its balance sheet and optimising the use of its regulatory capital,’ the Italian banking giant said in a statement.

UCCMB is a major Italian non-performing loan servicing and debt collection platform. Headquartered in Verona, it operates in Italy through a network of 25 offices and manages around €34 bn of assets.

Milan-listed property services group Prelios advised Fortress on the deal and acted as operating partner without disbursing any equity. The firm will also manage part of the loans through its fully-owned Prelios Credit Servicing unit.

Fortress is the majority shareholder of Italian asset manager Torre Sgr as well as Italfondiario, the country’s largest NPL-management company with €36.1 bn of assets under management.

The deal is expected to complete in the second quarter of 2015.

UniCredit was assisted by UBS Investment Bank, as financial advisor, and by Gianni Origoni Grippo Cappelli & Partners, as legal advisor. Fortress and Prelios was assisted by Mediobanca and Rothschild, as financial advisor, and by Legance, as legal advisor.

For Prelios, the operation is part of its strategy to act as third-party service provider particularly for foreign investors active in Italy. The company has also teamed up with London & Regional Properties to make an offer for Milan's historic Palazzo Broggi which was put on the market last year for €350 mln. Similarly, it has partnered with Starwood to table a bid for the UNA Hotels e Resorts portfolio.

Unicredit's sale - the country's largest distressed debt transaction in years – represents a positive step for the Italian banking sector, which is far behind other European countries in terms of cleaning up balance sheet but is expected to accelerate in the next months.

Earlier this week, local lender Cassa di Risparmio di Cesena sold a portfolio of Italian non-performing loans to HIG Capital through a securitisation.

The portfolio comprises 52 non-performing loans backed by a mixture of residential and commercial real estate, predominantly in the regions of Emilia-Romagna and Marche in central Italy.

‘This type of operations confirms the ongoing interest on the part of foreign institutional investors for the Italian distressed sector,’ commented Alessandro Riboni, CEO of Knight Frank in Italy. ‘We expect deal volumes to rise in the short term, particularly those linked to the non performing loan sector.’