European loan sales up 35 percent on 2016
April 17, 2018

The European loan portfolio market picked up pace in the second half of 2017, after a relatively slow first half. While just above EUR 40 billion worth of deals were concluded by mid-2017, the full year total went on to reach EUR 144 billion. This exceeds the record amounts for 2015 and 2016, according to new analysis from Deloitte.

Some large one-off deals provided much of the value for 2017's deal activity. These include the EUR 30 billion portfolio sold by Santander following its takeover of Banco Popular, the EUR 17.5 billion Project Ripon from UKAR and the EUR 12 billion Project Marina from BBVA.

Andrew Orr, Global Head of Transactions of portfolio lead advisory services at Deloitte, comments: "2017 has seen the largest single transactions since the onset of the financial crisis. Looking ahead, we expect another very active year in the Irish, Italian and Spanish markets, and we expect Greece to be more prevalent.

"With EUR 52 billion in reported ongoing transactions and a busy deal pipeline, 2018 is set to be another eventful year, with total volumes likely to exceed the EUR 100 billion mark for the fourth year running."

Spain recorded EUR 51.7 billion of non-performing loan (NPL) sales in 2017, followed by EUR 47.3 billion in Italy and then EUR 21.8 billion in the UK. Although Europe has traditionally been the centre for the NPL markets, NPL markets in Asia and South America are emerging. There are currently NPL levels of approximately US$520 billion in Asia, with an estimated $160 billion in Brazil.

Orr concludes: "According to the latest EBA transparency exercise, NPL ratios in one-third of the 25 jurisdictions covered by the survey are still above 10 percent, and the absolute levels of NPLs remain high at EUR 893 billion. In the UK and Ireland banks are now focusing on their non-core assets and have started to sell performing loan books. 20 percent of the 2017 deal volume was sales of performing loan portfolios, up from 9.5 percent in 2016. This will continue into 2018. Also, regulatory pressure continues to build and with the adoption of IFRS 9, we are going to see more proactive balance sheet management on an ongoing basis."





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The European loan portfolio market picked up pace in the second half of 2017, after a relatively slow first half. While just above EUR 40 billion worth of deals were concluded by mid-2017, the full year total went on to reach EUR 144 billion. This exceeds the record amounts for 2015 and 2016, according to new analysis from Deloitte.

Some large one-off deals provided much of the value for 2017's deal activity. These include the EUR 30 billion portfolio sold by Santander following its takeover of Banco Popular, the EUR 17.5 billion Project Ripon from UKAR and the EUR 12 billion Project Marina from BBVA.

Andrew Orr, Global Head of Transactions of portfolio lead advisory services at Deloitte, comments: "2017 has seen the largest single transactions since the onset of the financial crisis. Looking ahead, we expect another very active year in the Irish, Italian and Spanish markets, and we expect Greece to be more prevalent.

"With EUR 52 billion in reported ongoing transactions and a busy deal pipeline, 2018 is set to be another eventful year, with total volumes likely to exceed the EUR 100 billion mark for the fourth year running."

Spain recorded EUR 51.7 billion of non-performing loan (NPL) sales in 2017, followed by EUR 47.3 billion in Italy and then EUR 21.8 billion in the UK. Although Europe has traditionally been the centre for the NPL markets, NPL markets in Asia and South America are emerging. There are currently NPL levels of approximately US$520 billion in Asia, with an estimated $160 billion in Brazil.

Orr concludes: "According to the latest EBA transparency exercise, NPL ratios in one-third of the 25 jurisdictions covered by the survey are still above 10 percent, and the absolute levels of NPLs remain high at EUR 893 billion. In the UK and Ireland banks are now focusing on their non-core assets and have started to sell performing loan books. 20 percent of the 2017 deal volume was sales of performing loan portfolios, up from 9.5 percent in 2016. This will continue into 2018. Also, regulatory pressure continues to build and with the adoption of IFRS 9, we are going to see more proactive balance sheet management on an ongoing basis."



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