The impact of specialty finance is growing in the Italian economy. These are financial intermediaries specialized in lending to usually medium-small companies going through financial strain. This strain might manifest as delays in repayment schedules (if the delay is less than 90 days, the loan falls under the Stage 2 category, technically still in good standing) or businesses that, despite being fundamentally sound, face challenges accessing mainstream credit channels.
For more news like this, download our free financial news app.
Overview of the Growth in Specialty Finance
According to a recent study by PWC titled “The Italian specialty finance market for SMEs,” the volume of new loans issued by these institutions, known for their high level of digitization and faster fund disbursement compared to traditional channels, has doubled between 2018 and 2021, from €6 billion to €12 billion. During the same period, traditional banks saw a less than 20% increase in annual flow, from €222 billion in 2018 to €264 billion in 2021.
Specific Specialty Finance Institutions and Their Impact
Though the magnitudes are starkly different, it’s noteworthy that most specialty finance institutions are relatively new, some even having been established from pre-existing institutions acquired for the sole purpose of using their banking license. For example, Banca Progetto, originally known as Banca Lecchese, was acquired in 2015 by the British fund Oaktree from Banca Etruria, one of the four Central Italian banks. The others are Banca delle Marche, Cassa di Risparmio di Chieti, and Cassa di Risparmio di Ferrara. All faced challenges in those years due to the real estate market crisis.
Still, the market share of specialty finance institutions increased from 3% to 4% during this period, and given their growth trajectory, it likely saw further increases in 2022. Notably, due to their swiftness, which was crucial during the pandemic-induced emergency, their market share in credit backed by MCC and Sace guarantees grew from 2% to 6% from 2020 to 2022. This growth was bolstered by the strong role SMEs play, which, as highlighted by PWC’s research, constituted about 70% of the credits with public guarantees by the end of the first quarter in 2023.
Banca Progetto’s Prominent Role in Specialty Finance
In the context of specialty finance, Banca Progetto stood out, increasing its market share from 1% to 4%. Reflecting this, the bank, led by former Unicredit executive Paolo Fiorentino, closed 2022 with total assets of €6.7 billion (up 45% from €4.6 billion in 2021) and business loans worth €2.7 billion (up from €2.2 billion in 2021). By the end of March 2023, their total assets were €7.1 billion, with business loans amounting to €700 million. This growth was further driven by various securitization operations.
Banca CF+, a specialty finance spin-off from Credito Fondiario, might also see significant growth after acquiring operations of Credimi, an open bank initially established as an invoice trader. This acquisition solidified CF+’s long-sought low-cost funding source.
Details on the Rise of Factoring and Noteworthy Institutions
Interestingly, PWC’s analysis indicates a significant portion of loans guaranteed by MCC was used to refinance prior company debts, highlighting the liquidity needs of Italian SMEs.
This trend is further confirmed by the steady rise of factoring, with SMEs representing 80% of the client number and 20% of the turnover, which hit a record €287 billion in 2022, according to Assifact data. In this scenario, specialty finance institutions like Illimity, Clessidra Factoring, Generalfinance, and Banca Ifis have recorded substantial growth.
To provide specifics on the specialty finance market:
- By mid-2023, Illimity reported a turnover of €3.3 billion through its Growth Credit division, a 32% increase from the previous quarter.
- Clessidra Factoring increased its turnover by 47% in the first half of 2023 compared to 2022, reaching €286 million and a 56% increase in credit volume.
- Generalfinance, listed on the Star segment of Piazza Affari and specializing in providing liquidity to financially strained companies, reported a 22% growth in turnover, reaching €1.1 billion in the first half of the year.
- Banca Ifis, by far the largest player in the group, increased its turnover by 11%. As of the end of 2022, under CEO Frederik Geertman, they’re among the top ten in the Italian market, with a turnover of €13.7 billion.
DISCLAIMER: This article was written by a third party contributor and does not reflect the opinion of Born2Invest, its management, staff or its associates. Please review our disclaimer for more information.
This article may include forward-looking statements. These forward-looking statements generally are identified by the words “believe,” “project,” “estimate,” “become,” “plan,” “will,” and similar expressions. These forward-looking statements involve known and unknown risks as well as uncertainties, including those discussed in the following cautionary statements and elsewhere in this article and on this site. Although the Company may believe that its expectations are based on reasonable assumptions, the actual results that the Company may achieve may differ materially from any forward-looking statements, which reflect the opinions of the management of the Company only as of the date hereof. Additionally, please make sure to read these important disclosures.
First published in Be Beez. A third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.
Although we made reasonable efforts to provide accurate translations, some parts may be incorrect. Born2Invest assumes no responsibility for errors, omissions or ambiguities in the translations provided on this website. Any person or entity relying on translated content does so at their own risk. Born2Invest is not responsible for losses caused by such reliance on the accuracy or reliability of translated information. If you wish to report an error or inaccuracy in the translation, we encourage you to contact us.
What Is the Role of Fintech Companies in the Payments Ecosystem
The CEO of BIT2ME referred to the future of fintech as "good". However, he stated, "We live in a society...
UN Report Calls on Member States to Stop Criminalizing Drug Users
The report shows that a growing number of countries in all regions are adopting policies and practices that decriminalize drug...
Markets Heated Up This Past Week as Guidance from the Fed Was Bearish
The Fed left rates unchanged at this past week's meeting as expected but the guidance was hawkish. Markets didn't like...
Current Woes in Bonds Promise Future Grief for Stocks: Focus on Dow Jones
If you’re bullish, maybe you should lower your expectations of what the stock market can do for you in the...
The TopRanked.io Weekly Digest: What’s Hot in Affiliate Marketing [uMobix Affiliate Program Review]
This week, we're covering everything from hustle culture to spying on kids, making this affiliate digest look like it has...
Cannabis2 weeks ago
Cresco Labs Will Launch a Cannabis Ad on Spotify
Fintech6 days ago
Why Are Mexican Fintech Companies Increasingly Investing in Small Banks
Africa2 weeks ago
Bobo-Dioulasso Has a Regional Branch of the Burkinabe Social Development Fund
Crowdfunding4 days ago
Biova Project Launched an Equity Crowdfunding Campaign on Mamacrowd