Deloitte Portfolio Lead Advisory Services provides a snapshot of loan portfolio sales activity throughout Europe in the first half of 2016 and the hot topics in the key NPL markets.
Sales of European non-performing loans (NPLs) and non-core assets (NCAs) stand at €112 billion of completed and ongoing deals at the first half of 2016, already exceeding the figure of €104.3 billion for all of 2015.
Activity was driven by increased loan sale transactions in continental Europe, particularly in Italy and Central Eastern Europe. Between them they racked up €14.4 billion in completed deals, with a further €47.2 billion still ongoing in the first half of the year.
European financial institutions will continue to deleverage further as they tackle c. €2 trillion of non-core and non-performing assets. Meanwhile debt investors have around €110 billion in cash reserves targeted for Europe, which with leverage means they potentially have a fire power of over €350 billion.
Our key findings
- European loan sales reaches €112 billion in the first half of the year, already exceeding the total 2015 figure
- Italy has seen a substantial growth in activity with €11.4 billion of deals completed in H1 2016 and €40.6 billion in the pipeline
- Total transactions for 2016 expected to reach c.€140 billion
Whilst loan portfolio activity remains strong, there is still significant headway to be made in deleveraging terms as the non-core volume in Europe is still estimated to be at least €2trn. Although the markets continue to digest the impact of Brexit and the recently released European wide bank stress test results, a brisk end to the year is expected with well-capitalised buyers hoping to make up lost ground to invest in transactions across Europe.
Read past editions of our Deleveraging Europe series and other NPL publications:
Deleveraging Europe 2015 - 2016, February 2016
Deleveraging Europe Market Update H1 2015, August 2015
Restructuring Central Europe, NPL Markets to gain momentum, 2014