The GACS government-guarantee scheme successfully helped Italian banks with removing large volumes of NPL from their balance sheets.

However, the costs and benefits to the taxpayer will not be known for many years. We project the repayment of all 46 GACS and 7 non-guaranteed Italian NPL securitisations based on publicly available information. The total original gross book value of Italian NPL transactions considered here is EUR 129.5bn.

We find 24 transactions for which we do not expect the senior tranche to be repaid in full and the government guarantees to be called. The projected losses will exceed the guarantee premium earned by the Italian state on the GACS scheme.

However, we do not estimate the additional benefits of the GACS like the strengthening of the banking system or higher tax receipts which may well outweigh the projected costs.

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