A private Italian bank has succeeded in obtaining a London court order that will allow it to see documents, including letters of credit (L/Cs), underlying EUR 344 million (US$362 million) of securitisations it sold to its clients.

CFE Finance, an investment banking boutique specialised in niche trade finance strategies, must now hand over the documents underlying the securitisations it provided to Banca Generali so that the bank can determine the true structure and value of the assets.

Asset valuation

Banca Generali maintains that CFE several times changed the information it provided about the assets, and wants to see the underlying documents for itself to price the notes, some of which have rapidly lost value.

In one instance, the bank says CFE provided information in August 2021 that one of the securitisations comprised 11 L/Cs, 10 sovereign letters of guarantee and a commercial facility, all partially or fully backed by an identified export credit agency (ECA).

But the bank says that in November, CFE stated that the same securitisation consisted of five L/Cs, 13 loans or leases, two sovereign debts and one promissory note, with only five of these assets backed by an unnamed ECA.

EUR 16 million write-downs

Banco Generali's institutional clients are facing write-downs of about EUR 16 million on four trade finance securitisation structures based on emerging-market debt linked to Cuban and Sudanese receivables.

The Italian bank now has authorisation to see L/Cs, guarantees, indemnities and other documents underlying these securitisations, albeit with some limitations on their use so as to allay CFE's confidentiality concerns.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.