Credit

CEO Rubio: 'Intrum will not leave Italy, ready for investments and alliances'

Andrés Rubio President and CEO of Intrum: 'We are in Italy to stay and grow. M&A can be an opportunity but we will be selective'

4 February 2024

4' min read

'We are in Italy to stay and grow. How? M&A can be an opportunity but we will be selective. Certainly, the future will no longer pass only from non-performing loans, but we will give more and more space to services and management of credits from when they are in bonis'. Andrés Rubio, President and CEO of Intrum, the Stockholm-based European credit management giant, has a direct but polite manner. With an intense gaze, an informal approach, the manager, who was born in 1968, is in Italy for some top management meetings (including the industrial partner Intesa Sanpaolo, 49% partner of the Italian platform) and to direct the top management of the Italian division, one of the four main markets of a group that, given the market conditions, is undergoing a profound transformation.

Let's start with the scenario. The reduction of impaired stocks by banks and post-pandemic government aid have driven NPEs in the market to lows. For many observers, the super-cycle of the credit management world is over.

You will not be surprised that I disagree. I have been dealing with Npl for 22 years, between Japan and Europe. I have bought and managed Npl of all kinds. Today I see that the impaired are rearing their heads. We have low unemployment, rising inflation and the biggest rate hike we have ever seen: all this creates unprecedented pressure on consumers. Some countries are doing better, especially peripheral ones like Italy and Spain. Others, like Great Britain, are showing clear signs of stress on those who have to buy or pay a debt, and this is an early warning sign. Everywhere there is an increase in stage 2 (semi-impaired loans, ed), which have not yet turned into non-performing. Not yet. But this will happen. We predict between the end of 2024 and 2025. You cannot have such a big increase in rates without an effect.

His tenure as global ceo of Intrum began in 2023. And in just one year he has made a marked change in the group, replacing more than half the management team, lightening the portfolio, and significantly cutting costs. The market, however, is struggling to perceive this change of pace: Intrum's shares are near 15-year lows. How do you explain this?

Since I took office, I have drastically changed Intrum's strategy to address two major challenges. The first is inflation, which increases costs and forces us to become much more technological and efficient. The second issue is high rates, which have an impact on the cost of debt. Hence the decision to deleverage the portfolio in order to reduce leverage (thanks to the recent sale of a EUR 33 billion portfolio of gross Npe to Cerberus, ed). But this also gave rise to the idea of forming partnerships to buy assets together with third parties and become leaders in the countries where we are present by increasing assets under management and services offered. We are at the beginning of this journey, which is not a short one. But 2024 will show the change of pace. I am very confident.

The group will meanwhile exit some markets, especially in Central and Eastern Europe. What are your plans for Italy?

I want to be very clear. We have no intention of leaving Italy, which is one of our four main markets. On the contrary, Italy is an attractive market where we can do new business. Intesa Sanpaolo is our partner and one of the top 5 global clients. We want to focus on this country, where we want to invest and grow. Here we have a strong management team, which I respect and have full confidence in, which will do very well.

The relationship with your partner Intesa Sanpaolo (49% shareholder of Intrum Italy) has not been without tension in the past. How are things going today?

Long-term relationships have various stages: the great thing is to manage them and come out even stronger. Today I can say that Intesa Sanpaolo is a key customer, we have been partners since 2018 and there is a very good relationship.

The market is always looking to consolidate the sector. What role can Intrum Italia play? There are rumours in the market of your possible interest, among others, in Gardant, which has also ended up on DoValue's radar.

I agree that the market needs to consolidate, in Italy as in the rest of Europe. It is a question of scale, and this would also serve to diversify our presence in the markets and portfolios. One thing is certain: everyone who wants to sell comes through us because we are the leader in Europe in both investment and credit servicing. And we want to continue to be so. Last year we made four acquisitions in Europe. If there is an opportunity in Italy, we will evaluate. We are open to reason, but we will be selective. M& is not a strategic objective per se.

Under what conditions could you move?

I don't want to buy assets through M&A. I want to buy new business, new contracts, and on sensible financial terms. I want to add important customers and strategic servicing.

And on your own, how do you intend to grow in Italy?

Normally, a credit becomes bad and comes to us for recovery. Instead, we have to change our perspective and do more at all stages: both when the loan is Utp (probable default, ed.) and when the loans are not yet impaired. There is much more value for banks and debtors in avoiding deterioration, rather than in partially recovering it. We want to do this and broaden the perspective to real estate and focus more and more on servicing. The sophistication of Italian banks and the long relationship in using servicers as partners make Italy the best market to do this.