Monetizing non-strategic assets in the US Loan Sale Market
Factors in shaping the loan sale market
While the overall health of the US financial sector has improved significantly since the depths of the combined global financial and economic crises, a number of legacy issues remain. For some institutions, strategy and execution have shifted from crisis to growth. For others, resolving legacy asset quality and underperformance are at the forefront.
Throughout the last six years, loan sales have been a highly popular portfolio management tool used by banks to exit non-core, under-performing and non-performing loan portfolios. During the past two years alone, there have been in excess of 300 loan portfolio sale transactions in the United States.
Going forward, loan sales will likely continue to be a tool used by financial institutions in executing strategy - be it growth, exiting non-core assets or dealing with legacy issues. In the first half of 2014 alone, there were at least 80 loan portfolio transactions aggregating over $24.5 billion.
This report will take a look at the U.S. loan portfolio sale market and some insights that can be drawn from transactions that have occurred since 2009. We will then highlight a number of factors that may be important in shaping the loan sale market going forward.