Deleveraging Europe 2016-2017

Uncovering opportunities in 2017

Six months ago, Deloitte UK forecast a resurgence in distressed debt sales across Europe in the second half of 2016. Did banks continue to deleverage at the same pace? What do we expect to see in the loan sale market in 2017?

The fourth issue of Deleveraging Europe gives an overview of the activity in the European loan portfolio market in 2016. The report outlines our expectations on how key markets and specifically loan sale transactions may evolve in the coming year, and shares the views of market players - both buyers and sellers – on where they see the largest opportunities arising.

The European distressed debt market has regained momentum. Uncertainty over the terms of Brexit and the US Presidential transition temporarily delayed deal making in mid-2016, but the fundamental balance sheet and regulatory drivers of deleveraging proved stronger.

Looking ahead

In the coming year Europe’s banks will find that holding non-core assets and NPLs is increasingly uncomfortable as regulatory pressure continues to mount. The political climate may also become less tractable. Europe’s policymakers continue to focus on reducing banks’ non-core exposures and are likely to require any bank that does not meet capital requirements to deleverage. The European Central Bank has signalled NPL resolution as a priority for the coming year. Therefore we expect to see even higher levels of loan sale activity in 2017.

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