According to Cointelegraph: BlockInvest, an Italian startup, is set to tokenize non-performing loans (NPLs) in two distinct projects. This comes against the backdrop of a distressed loan market in Italy that had soared to hundreds of billions of euros. The first project will be a proof-of-concept, and the other will tokenize defaulting Italian mortgages. In December 2015, NPLs in Italy reached a peak of 360 billion euros ($391 billion at the time), although that number has since dwindled.
The startup will collaborate with 130 Servicing, a securitization consultant based in Milan, to develop a proof-of-concept to issue indigenous digital asset-based securities notes directly on-chain. Their main target is to tokenize distressed real estate credits, acquired by the Milan-based credit management firm, Morgan & Davis, to permit the tokenization of financing agreements and correlating instruments.
BlockInvest, which draws support from Credit Agricole Italia bank, makes use of Polygon technology. Tokenization is expected to facilitate fractional ownership, enhance liquidity, and foster a more manageable and accessible market.
As per a company statement, "The goal of bringing these assets on-chain is to minimize the impact of non-performing exposures on the institution's financial stability and to restore the health of the loan portfolio.”
The Italian NPL market has been a formidable issue for several years. The Financial Stability Board (FSB) released a report on January 18, stating that legislation brought in 2016 has lessened the volume of NPLs, predominantly leaving complex "not likely to pay" loans hanging. The FSB urged the Italian government to continue promoting the market, improve the court system for easier NPL settlements, and dedicate more resources to tackle the issue.