european loan sale markets


Full steam ahead

European loan sale markets

There is a great need for yield given the ongoing low interest rate phase. In addition, politics and regulators have identified a necessity for banks to get rid of their NPL stocks, so to be able to lend out fresh money to the real economy. The European loan portfolio market continued at pace through 2018.

These three aspects have visible influence on the loan portfolio markets. 2017 had been the year of EU finance ministers’ action plan and further EU Commission’s initiatives on secondary market for NPLs. According to the Third Progress Report of the EU Commission from November 2018, significant progress has been made in the meantime on the reduction of non-performing loans and further risk reduction in the Banking Union. The Commission furthermore notices a steady growth in NPL Sales. But more needs to be done…

Our UK-colleagues have compiled the eighth edition of our Global Deleveraging Report covering the time until and including Q3/2018 (CLICK HERE for full report). The report examines key loan sales markets across Europe and in emerging markets, including the latest transactions and forward-looking insights.

The European loan portfolio market continued at pace through 2018, with €120bn in face value of deals concluded in the year to date, already surpassing the total traded in 2016, and on course to exceed €200bn in the full year. Deal activity continued unabated throughout the usually quiet summer holidays, as banks respond to regulatory pressures to reduce leverage and offload assets, completing €48bn during the third quarter.

2018 has seen a significant uplift in shipping loan portfolio activity, starting with the successful sale of Deutsche Bank’s €1bn shipping loan portfolio, which has been subsequently followed by over €5bn of portfolios in the market across Europe.

The trend of an increasing proportion of performing loan portfolios continues, representing 15% of traded portfolios in the first three quarters of 2018, as ABS markets support a competitive pricing dynamic.

This level of activity is likely to continue, as central banks and regulators continue to apply pressure on banks to escalate their deleveraging activities.