NPL&REO News

Defaults reached a new low following the collapse of Lehman Brothers.

27 May, 2025

The volume of non-performing loans (NPL) fell to 3.2% in March, the lowest level since November 2008 and four tenths lower than in March 2024.

Spanish bank defaults hit a new low. The volume of NPL stood at 3.21% at the end of March, which is the lowest level since November 2008. At that time, it rose above 3% as a result of the effects of the Lehman Brothers bankruptcy. This marks two consecutive months of decline, following a slight upturn in January when the figure stood at 3.33%. Compared to the same period in 2024, there has been a fall of four tenths of a percentage point, down from 3.61%, according to data from the Bank of Spain (BdE) published on Monday.

This translates into a reduction of over €4 billion to €38.28 billion. This decline is occurring despite an increase in the loan portfolio from €1.151 trilion to €1.159 trilion. However, it should be noted that the default rate for banks, savings banks, and credit cooperatives fell slightly from 3.21% to 3.12%, representing a decrease of €773 million, while the rate for credit institutions remained unchanged.

Specifically, this figure also slowed down, ending March at 5.79%, despite the portfolio increasing from €2.492 billion to €2.553 billion. This is a significant change compared to twelve months ago, when the figure was close to 7%, with 3.04 billion. It should be noted that consumer credit is experiencing a record period of double-digit growth at the start of the year.

In mid-February, the European Commission referred Spain to the Court of Justice of the European Union (CJEU) for failing to transpose the directive on non-performing loans into Spanish law. The directive aims to promote the development of a functioning secondary market for non-performing loans, as well as establishing rules for authorising and supervising loan purchasers and administrators. To this end, harmonised criteria are needed to enable administrators to trade across borders.

The government has acknowledged the reprimand and is stepping up efforts to bring the legislation before the Congress of Deputies as soon as possible. According to La Información, the government has asked the Council of State, its highest advisory body, to expedite the mandatory report so that the text can be presented to the lower house promptly. The executive must gather preliminary reports for this process, which delays its implementation.

Original Story: La información Económica | Author: Carmen Muñoz | Edition and translation: Prime Yield

Servicers return loans to banks

21 May, 2025

With a front-loaded “haircut” and new financing, the first mortgage loans that had been sold to funds are gradually returning to the banking system and are now being serviced normally.

These are loans worth some 2 billion euros, which today, after three years of consistente repayment, have “greened up” and can return to the credit system that is thirsty for new mortgages.

These loans have been regulated by the management companies with a significant debt “haircut”, which, however, will not kick in until the end of their repayment, in order to ensure that the borrower will adhere to the arrangement.

With the return of these loans to the banks, it is planned that the “haircut” will be front-loaded to the benefit of the borrowers, who will receive new financing from the bank to which they will now owe his debt. This way, they will repay their dues to the fund to which the loan has been sold, while earning the amount of te write-off that has been agreeded upon for the end of the loan repayment.

This initiative is being taken by doValue in collaboration wiith National Bank and Eurobank, as well as smaller banks, such as Attica and Optima.

Original Story: Ekathimerini | Author: Evgenia Tzortzi
Edition: Prime Yield

Default in Brazil hits record high in April with 70.29 million debtors

16 May, 2025

In April 2025, the number of people in debt reached a record high, with 70.29 million Brazilians — equivalent to 43.36% of the country’s adult population — defaulting on their payments, according to the latest data from the CNDL (National Confederation of Shopkeepers) and the SPC Brasil (Credit Protection Service).

Compared to the same month in 2024, the number of debtors increased by 4.59%. From March to April 2025, the increase was 1.09%. According to José César da Costa, president of the CNDL, this record is related to Brazilians’ difficulty in “balancing the budget at the end of the month”.

‘Despite the slight improvement in income indices and the reduction in unemployment, these advances have not been enough to contain the increase in debts. The combination of high prices for essential items, high levels of family indebtedness and the upward trend in the basic interest rate are directly contributing to the worsening of this worrying scenario,” he said.

The age group with the highest number of people in debt is 30 to 39 years old, with 17.38 million people in this category. Those over 85 owe the least, at 416 thousand.

The Southeast, the country’s most populous region, has the highest number of people with a bad credit rating, at 30.25 million. In percentage terms, the largest proportion of the population with a bad credit rating is in the Midwest, at 46.12%.

On average, each delinquent consumer owes R$4,689.54 to 2.18 creditor companies, most of which are banks. Debts in arrears grew by 8.75% in April compared to the same period in 2024.

Original Story: Poder 360
Edition and translation: Prime Yield

National Bank of Greece completes the Frontier III transaction

15 May, 2025

Following an announcement on 27 February 2025, National Bank of Greece (NBG) announced the completion of the Frontier III transaction. This involved the securitisation of a portfolio of non-performing exposures (NPEs) with a total gross book value of around €0.7 billion. This was made possible by the receipt of a State guarantee on the senior notes under the Hellenic Asset Protection Scheme (HAPS).

As part of the agreement, NBG retains 100% of the senior notes and 5% of the mezzanine and junior notes, while selling 95% of the mezzanine and junior notes to funds managed by Bracebridge LLC. Morgan Stanley & Co. International Plc acted as the financial advisor and arranger of the transaction. Clifford Chance LLP and Karatzas & Partners Law Firm provided international and local external legal counsel to NBG, respectively.

Original Story: NBG PR
Edition and translation: Prime Yield

Banks ‘see’ repossessed loans as a way to increase their asset base

7 May, 2025

Greece’s four systemic banking groups can now turn to defaulted loans that have been successfully regulated and are regularly repaid to increase their asset and loan portfolios.

Since the supervisory authority (SSM) has not yet given the green light for banks to directly buy back loans they have sold or securitised themselves, the secondary market is open to them in two other ways.

The first is to refinance the loans individually. In this case, the bank grants the borrower, whose debt is in a fund, a new loan to repay the original one. In this indirect way, the loan returns within the banking system, which the banks have received official information about from the authorities. The second way is to buy packages of loans that have been sold or securitised by other banks in the past. The current ban on the repurchase of restructured exposures applies only to loans originated by the bank itself, and not to loans originated by third parties.

NPL management companies have already begun preparations, categorising well-performing exposures to facilitate the creation of packages that can be returned to the banking sector. Analysts estimate that, although banks have not announced any immediate moves, we are likely to see the first transactions in this category later this year, acting as a “test” for the market. These changes will also depend on the course of general credit expansion.

According to official data from the Bank of Greece for the first quarter of 2025, credit expansion rates remained strong. The annual rate in the private sector was above 10 per cent, while corporate credit balances grew by 16 per cent per year. For households, the change in credit stabilised at -0.5%, with the prospect of turning positive. The contraction in mortgage lending was significantly limited in March to -2.4 per cent, the smallest decline in many years, thanks to an increase in new mortgage disbursements (+30 per cent in the two-month period from January to February 2025 compared to 2024).

Although banks now have new ways of bringing defaulted loans back into their portfolios, the use of the secondary market will probably depend on whether the current rate of credit expansion is sufficient to meet banks’ targets this year, although the first quarter data show a positive trend.

Original Story: Money and Life
Edition and translation: Prime Yield

Banks’ NPL ratio falls in February to lowest level since 2008

2 May, 2025

The non-performing loans (NPL) ratio is back to its lowest level since November 2008. It is now at a level similar to that at the end of 1980, when the BdE’s historical series began.

The NPL ratio of Spanish banks stood at 3.30% at the end of February, slightly below the 3.33% recorded in January, according to preliminary data published by the Bank of Spain.

This brings the NPL ratio back to its lowest level since November 2008, when it stood at 3.21%, after rising to 3.33% in January. It is also 30 basis points lower than the ratio recorded in February 2024, when it stood at 3.62%. The current level is similar to that recorded at the end of 1980, when the Financial Supervisory Authority’s historical series began.

In terms of the volume of NPL, they fell by 364 million euros in February to 38,995 million euros, while the year-on-year reduction was 3,258 million euros.

Moreover, the reduction in the NPL ratio was also supported by an increase in the loan portfolio: at the end of February the stock stood at 1,183 billion euros, an increase of some 1,560 million euros compared with January. On the other hand, compared with February 2024, the volume of bank loans had increased by some 16.6 billion euro.

The data broken down by type of institution show that the ratio of doubtful assets of all deposit-taking institutions (banks, savings banks and cooperative societies) ended February at 3.21%, four basis points lower than in the previous month and 29 basis points lower than in the same period of 2024.

In absolute terms, this type of institution recorded a decrease of 343 million euro in its doubtful assets portfolio to 36,325 million euro. Compared with February 2024, the figure is around 2,922 million lower.

The NPL ratio of credit institutions increased slightly to 5.86%, two basis points more than in January. On a year-on-year basis, it fell by 73 basis points.

The volume of doubtful loans of this type of institution at the end of February was 2,492 million euro, eight million less than the monthly variation, while the doubtful balance was reduced by 328 million euro compared to the same month of the previous year.

Finally, according to the Bank of Spain, provisions for all credit institutions amounted to 28,828 million, 128 million less than in January, while the year-on-year variation showed a reduction of 1,203 million.

Original Story: Idealista News | Author: Europa Press / Ana P.Alarcos
Edition and translation: Prime Yield