Insights

Deleveraging Europe

H1 2016

August 2016

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.

Overview

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

Headline figures

Looking ahead

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.

Deloitte expert viewpoint

"Having lived through uncertainty surrounding the EU Referendum vote, NPL activity across Europe is where we would expect. We anticipate most of the sales to conclude and the pipeline of deals to reopen in the second half of 2016. Non-performing loans remain a significant drag on a bank’s overall performance, both financially and operationally and most European institutions are focused on exiting their NPL stocks on an accelerated basis."

David Edmonds, Global Head, Portfolio Lead Advisory Services

Previous publications

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

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