The European non-performing loan (NPL) market reached a new peak in 2018, with disposals totalling €205.2 bn in gross book value (GBV), according to the new European NPL FY report from Debtwire ABS.
Debtwire’s report tracked 142 transactions, recording a particularly intense pace of activity in the last quarter, given that at the end of 3Q18, closed deals totalled € 125bn.
Italy was the most active country in 2018, producing half of the total NPL sales. Debtwire identified 64 closed NPL sales with a GBV of € 103.6bn, almost half of which were via securitisations within the government’s Garanzia sulla Cartolarizzazione delle Sofferenze (GACS) scheme, which runs only until 6 March 2019.
At the same time, sales started to slow down in Spain as large Spanish banks near end of their balance sheet clean-ups.However, a massive € 43.2bn was completed in 2018 across 27 deals and most of these have involved two jumbo buyers, Cerberus Capital Management and Lone Star Funds.
Other significant trend is that the sales are starting to accelerate in other Southern European countries, still the ones with the highest NPL ratios, and market participants expect to see more in 2019. In 2018, Greek banks closed eight sales for a total volume of €13.9bn, Portuguese banks closed 16 NPL and REO deals for a total volume of €8bn and Cyprus saw two deals for €2.9 bn.
In Ireland, there were eight deals for EUR 14.3bn, while in the United Kingdom the bad bank UKAR dominated the loan disposal market with £5.8bn of sales out of a total £6.5bn. Germany has also seen disposal of NPLs connected with troubled local banks. HSH Nordbank’s € 6.3bn portfolio, sold together with the bank to Cerberus, made up most of the €7.7bn volume in the country.
«The NPL market has reached a peak that will not be topped in 2019. This is especially the case in Italy, where the GACS effect will slow down, with most large banks having already taken advantage of the program and now needing to focus on unlikely to pay (UTP) portfolios. Still, with European regulators pushing for banks to dispose of their bad loans quickly, activity will remain consistently intense across the continent» said Alessia Pirolo, Head of NPL Coverage, Debtwire.
Original Story: Property EU| Jane Roberts
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Edition:Prime Yield