Hogan Lovells assisted Banca Valsabbina to support Italian SME

For some time now the delays in paying by the Italian Public Administration have been one of the most critical issues of our economic system.

In some areas, these failings have led to payment delays of several years, and the average payment times in Italy have turned out to be among the longest at a European level (three times the EU average), resulting in a domino effect of liquidity problems for the undertakings supplying the Public Administration.

In order to support the SMEs working in such sector, Banca Valsabbina has launched a three-year programme, for an overall amount of € 500 million, for the non-recourse purchase of the trade receivables owed by the Public Administration to the undertakings.

Hogan Lovells assisted Banca Valsabbina with our Italian IDCM team led by partner Corrado Fiscale together with Giulia Arenaccio (counsel), Roberto Trionte (Trainee) and Matteo Scuriatti (Trainee). Tax partner Fulvia Astolfi and Maria Cristina Conte (Senior Associate) assisted the client on tax issues.

Purchases will be made under Law 130/99 on the securitisation of receivables, through an innovative structure devised by Banca Valsabbina with the aid of FISG - a leading company in arranging securitisation transactions in Italy and belonging to Gruppo Finanziaria Internazionale -, as Arranger, and Hogan Lovells. A special purpose vehicle has been incorporated, named Valsabbina Investimenti Srl, which will be entirely financed by Banca Valsabbina and will purchase the receivables from public entities (except for municipal utilities) certified on the relevant "Platform" of the Ministry for Economy and Finance (assistance will be made available to companies that are currently unable to access the Platform), for a minimum par value of € 30,000 per debtor.

Companies may assign their receivables on a final (non-recourse) basis, quickly and upon favourable terms, reducing payment delays and optimising their cash flows. This has manifold benefits, as summarised below:

  • Improvement of the financial position, since companies may replace the receivables within their financial statements with immediately available funds
  • Removal of the risk of delayed payment or failure to pay by the Public Administration
  • A single payment of the amounts due
  • Removal of the costs and charges associated with credit recovery
  • An alternative to letters of credit and bank guarantees (more expensive on average)
  • Improvement of the risk profile of working capital and of financial ratios.

The service is already available to all of the Bank's clients. The Officine group (through the companies Officine CST and Officine MC), a leader in the field of credit management with more than € 14 billion processed over 12 years of activity, will be partner in the initiative, and will support enterprises during the certification and assignment process. The vehicle company will be managed by Securitisation Services, controlled by Banca Finint and a market leader in the field of supply of structured finance services, with more than 270 transactions managed. The role as paying agent will be played by Banca Finint.

This is an interesting investment for the our client in terms of the risk/return ratio, considering that these types of receivables are favourably weighted.


Cristina Bagatin


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