Deloitte: Romania dominates the NPLs market in the CEE
Overall the level of market activity in Europe is expected to remain strong. Certain markets are becoming more mature with some sellers now focusing on divesting their performing non-core assets; however we still believe that certain distressed situations in key European markets have yet to be unlocked.
- 2015 completed sales were €104.3bn, up 26% from 2014's total of €83bn in sales of European non-performing loans (NPLs) and non-core assets (NCAs)
- Loan portfolio market total sales are expected to reach €130bn in 2016
- The most active buyers in the CEE region were Deutsche Bank, Kredyt Inkaso, Kruk and APS
- Amongst the top active sellers we can note Banca Comerciala Romana (BCR), Unicredit Tiriac Bank (Romania) and Piraeus Bank Romania
“If we compare the availability of the NPLs transacted in Romania in the last couple of years with the rest of the CEE, we can definitely say that Romania counts among the most active country in the region,” said Radu Dumitrescu, Director Financial Advisory Services Deloitte Romania.
Explore the study
Deloitte Portfolio Lead Advisory Services shares thoughts on the future of the European loan sale market. Our Deleveraging Europe report provides an overview of the non-core and NPL markets across Europe and our expectations of transaction activity in 2015 and beyond. We gathered responses from 30 banks across Europe to gauge their views on deleveraging; including main drivers, chosen strategies and key challenges.
“The active Romanian NPL market environment is also reflected by the development of the legal documentation used in such transactions. While it might be premature to speak at this stage about an actual “market standard” in terms of portfolio transfer agreements, the lawyers and financial advisors which worked on multiple NPL deals have developed informally a set of “best practices”. Notably, this is common also for other jurisdictions, where NPL portfolio transfer agreements tend to be more bespoke contracts, drafted and negotiated in accordance with the specifics of each deal, yet considering local and international best practices. This may be slightly different (but not always) in individual NPL transfers (single large exposures), where the standard documents developed by LMA (the Loan Markets Association) may be a suitable contractual form as a starting point” said Andrei Burz Pinzaru, Partner in Reff & Associates, law firm member of Deloitte Legal network.
- Romania remains the most active market in the CEE region and is expected to continue to remain active in 2016
- At CEE level, completed deals in 2015 remained in line with 2014 levels
- A number of transactions initiated in late 2015 in the CEE remain ongoing and will be a key driver for 2016 market trend
- Failed deals are not helping the market develop and investors retain a healthy skepticism regarding the likelihood of deals completing
- Establishing a servicing platform for secured portfolios is a key concern for many international investors
- Regional investors are working to build relationships with international investors who lack the experience to operate in the region but have the capital to purchase the larger portfolios which are coming to market
- Changes in regulatory policies and additional write-offs relating to the latest round of AQR exercises had led to the narrowing of the pricing gap between buyers and sellers of NPLs
- Slovenia and Croatia will likely see substantial increase in deal activity in 2016