Shares in doValue plunge 17% after Spain writedowns

MILAN (Reuters) – Shares in doValue plunged on Monday after Italy’s biggest bad loan manager said it had booked non-cash charges on its Spanish operations, swinging to a nine-month loss.

The company said late on Friday its net loss in the first nine months was 25.7 million euros ($28 million) due to impairments it booked on some intangible assets in Spain.

Before restating its accounts, doValue had reported a 5.7 million euro net profit for the January-September period.

While the impairments have no impact on core profit and net debt, the operating profit for the period roughly halved.

Shares lost 17% by 1236 GMT, ahead of an investor call that doValue management will hold at 1130 GMT on Tuesday.

With Italy’s non-performing loan sector under pressure due to rising costs and in the absence of significant new flows of bad loans, speculation has mounted about possible consolidation.

Shares in doValue have lost nearly a fifth of their value over the past three months and are down some 60% in the last year, according to LSEG data.

On Friday, shares in doValue rose in early trade on a Bloomberg report about discussions with U.S. fund Elliott to acquire unlisted rival Gardant.

By teaming up with state-backed peer AMCO, Gardant in late 2022 managed to secure an agreement with BPER, the last major Italian bank to have kept its bad loan business in house.

Gardant and BPER are expected to announce the finalisation of that deal soon, which will provide a steady revenue flow to the company controlled by Elliot.

Italy has became Europe’s biggest market for soured loans after its banks in recent years offloaded more than 300 billion euros in bad debts.

DoValue said it expected to close 2023 with a single digit positive result, sticking to its forecast for core profit and net debt.

Revenues will instead undershoot by around 2% the lower end of the guidance provided due to strikes of notary offices and courts in Greece, which will delay to early 2024 recoveries of bad debts expected at the end of last year, it said.

(Reporting by Valentina Za, editing by Alvise Armellini and Ros Russell)