Deleveraging Europe 2016-2017
Uncovering opportunities in 2017
The fourth issue of Deleveraging Europe gives an overview of the activity in the European loan portfolio market in 2016. We outline our expectations on how key markets and specifically loan sale transactions may evolve in the coming year and we hear the views directly from the market players - both buyers and sellers – on where they see the largest opportunities arising.
Six months ago we 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 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.
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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 signaled NPL resolution as a priority for the coming year. Therefore we expect to see even higher levels of loan sale activity in 2017.
Deloitte expert viewpoint
“After a mid-year pause in loan sales caused by the EU referendum, deal activity across Europe bounced back in the second half of 2016 to reach record levels. NPL resolution is high on the European Central Bank’s agenda, and this is putting enormous pressure on domestic regulators to introduce regulatory and judicial measures that facilitate loan sale trading. In all markets there will be little let up in regulatory pressure on bank balance sheets. This will be the key driver for loan sale activity in 2017.”
David Edmonds, Global Head, Portfolio Lead Advisory Services
Read past editions of our Deleveraging Europe series and other NPL publications:
Deleveraging Europe H1 2016, August 2016
Deleveraging Europe 2015 - 2016, February 2016
Deleveraging Europe Market Update H1 2015, August 2015
Restructuring Central Europe, NPL Markets to gain momentum, 2014