|  14.03.2016

European debt sales top €100bn for the first time since 2008

Further evidence of “non-bank lenders” stepping in to replace traditional high street banks.

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Sales of loan portfolios by deleveraging banks in Europe reached a record €104 billion last year, with the UK accounting for more than one-third of the total, according to new research from KPMG.


In its new annual European Debt Sales Report, the professional services firm also found that investor interest in buying the continent’s loan portfolios remains strong with a pipeline of over €32 billion in ongoing transactions so far this year. The report notes that the pace of this activity is likely to persist into 2017 as so-called ‘bad banks’ continue to wind down their loan portfolios, particularly in the UK and Ireland.


The largest single deal in 2015 was UK Asset Resolution’s €18 billion sale of the Project Granite loan portfolio to Cerberus Capital Management. These loans, acquired from the nationalised Northern Rock bank, accounted for almost half the UK’s €39bn of completed transactions.


Speranta Munteanu, Partner, Deal Advisory, KPMG Romania, sees the local market showing signs of recovery in terms of loan portfolio deals: “In Romania, a major deal took place in 2013 when the Royal Bank of Scotland (RBS) sold a secured non-performing loan portfolio of approximately EUR 100 million, with KPMG’s assistance, but after that the market slowed down. In 2015, however, we saw a noteworthy rise in deals, with portfolio transactions worth in excess of EUR 1.6 billion signed close to year-end”.


Ireland had another bumper year, with sales of €25bn. Its ‘bad bank’, the National Asset Management Agency (NAMA), has been one of the most active vendors and is on track to complete its loan disposal programme before its 2020 mandate.


However, intense competition between buyers for loan portfolios in these two countries is turning investor interest to other markets, in particular the recovering economies of Spain (€15.8bn in completed loan sales) and Italy (€13.3bn in closed sales) as buyers and financiers are increasingly focussed in their real estate assets.


Progress has been less marked across central and eastern European countries, but they are continuing to mature as loan markets with 40 transactions across all asset classes in 2015.


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