Fitch Ratings-London-27 October 2016: Fitch Ratings has assigned Centrotrenta Servicing S.p.A.’s
(CS) Italian Residential, Commercial and Asset-Backed Securities (ABS) Master Servicer Ratings
at ‘RMS2-‘, ‘CMS2-‘ and ‘ABMS2-‘, respectively.

The ratings reflect CS’s role as a master servicer across a wide variety of Italian transactions,
with a significant level of sub-servicer oversight and robust quality controls. The ratings also
take into consideration that CS does not make any loan-level credit decisions or carry out cash
management. CS does not typically act as primary, special or back-up servicer on transactions
under management, as other rated master servicers do in EMEA. The business plan is to remain
independent from loan management. This corporate strategy is, in Fitch’s view, feasible as
demonstrated by the growth in the business over the past three years.
CS was established as a financial intermediary in 2011 and was granted the rights to perform
servicing activities in October 2012. The majority shareholder is Centotrenta Management S.r.l.
with a private equity holding a minority stake. The company’s founders are heavily involved in
business operations and are on the board of directors. Although CS only has a five-year history,
servicing activities were previously carried out under the Centotrenta Management brand. This
experience has been factored into Fitch’s analysis as it indicates the long-term engagement of the
senior management team, which provides the company with stability and strategic direction.
Since inception, the senior management team is unchanged although compared with other Italian
rated servicers, industry experience and company tenure are low.The majority of CS’s board
members, CS’s CEO and one department head previously worked for Centotrenta Management,
mitigating concerns over the SMT’s short company tenure.
Although the ratings reflect CS’s activity as a master servicer, Fitch acknowledges that CS
also undertakes other roles in securitisations such as advisory and restructuring, which provide
additional income streams. In Fitch’s view the diversification of revenues is good for the
sustainability of the business.
Neither CS nor its shareholders are Fitch-rated financial institutions, thus CS has been assessed
as a stand-alone entity. CS is debt free and self-funded. In Fitch’s view the servicer’s financial
condition is stable and sufficient to meet its medium-term objectives, which is taken into
consideration in the ratings. Since its inception CS has reported positive net profits, with a
significant increase in 2015. This was largely driven by the transfer of legal servicing rights from
the group level (Centotrenta Management) to the servicer, which took place in January 2015.
The ratings reflect that the majority of training offered by CS is ‘on the job’, but ongoing training
support to staff is additionally provided by external professional partners. Employees are
encouraged to attend seminars and other professional events. In Fitch’s view a structured training
framework, as seen at other rated Italian servicers, improves a servicer’s ability to identify and
manage operational risks associated with smaller teams, such as key person dependency. The lack
of a formal programme at CS is largely offset by no staff turnover and that senior management is
involved in staff support.
CS operates the three lines of defence risk management framework, in line with highly rated
servicers. Compliance, anti-money laundering and internal audit are outsourced to appropriate
specialist third parties. These functions report directly to CS’s board of directors, providing a fully
independent review of the servicer. CS is subject to significant market-recognised external audits
on IT security, quality, risk and compliance management of cloud services and its data centre,
which is not typically seen at other Italian rated servicers.
The ratings also reflect CS’s adequate technology. The main master servicing platform was built
in-house to provide efficient monitoring of sub-servicers, lawyers and portfolio performance. In
Fitch’s view the web-based system is user friendly and has strong reporting capabilities. However,
the level of automation is low compared with other Italian-rated servicers. Business continuity
and disaster recovery plans are fully documented and tested twice a year. The most recent test was
completed in June 2016 and resulted in no findings.
At end May 2016, CS’s servicing portfolio totalled EUR4.2bn, comprising around 1.5 million
loans. CS acted as master servicer on 99% of these loans, with the remainder representing a
primary servicing instruction. The master servicing portfolio consisted of 33 transactions with a
value of EUR4.17bn; 1.5% were residential loans, 23.9% were commercial loans and 74.6% ABS
The rating action commentary is based on information provided to Fitch at end-May 2016, unless
stated otherwise.
The servicer rating is based on the methodology described in ‘Rating Criteria for Structured
Finance Servicers’ dated 1 July 2016, which includes a comparison of Italian-rated servicers and
rated master servicers in EMEA as part of the review.
Primary Analyst
Mirella Tinti
Associate Director
+44 20 3530 1241
Fitch Ratings Limited
30 North Colonnade
London E14 5GN
Secondary Analyst
Lauren Hipwood
+44 20 3530 1612
Committee Chairperson
Sanja Paic, CFA
Senior Director
+44 20 3530 1282
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