SALES of European loans are on course to meet a record high of €128.5bn (£115.19bn) by the end of 2017, surpassing 2016’s total of €103.3bn.
According to new research from Deloitte, €42bn worth of deals were completed in Europe in the first half of the year, with another €86.5bn in ongoing deals. The figures refer to both non-performing loans (NPLs) and non-core assets (NCAs).
“The market is looking at another strong year, but Europe’s non-performing loan backlog is at an interesting junction,” said Andrew Orr, UK head of portfolio lead advisory services at Deloitte.
“On the one hand, the heavy regulatory focus on NPL sales has continued to drive up the pace of deals, yet there is still a way to go in terms of developing the market for this type of debt. Selling these assets allows banks to resume normalised lending levels, which would benefit the continent’s economies.”
Deloitte also reported that investors have more than $300bn (£229.26bn) in funds available for distressed debt acquisitions in Europe, indicating that the pool of funds looking to buy assets could have potentially doubled over the past twelve months. Meanwhile, new markets have begun to open up in China, India and Brazil, pointing towards a global trend.
“While European loan sale activity will continue at its own pace, investors are now looking further afield to countries like Brazil,” added Orr. “Here three years of recession have generated NPL volumes that cannot be absorbed by the banking sector alone. Also in both China and India investors are now applying for licenses in preparation for future loan trades.”
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