Pandemic causes European NPL sales to fall to four-year low
Sales of non-performing loans (NPLs) hit a four-year low last year with EUR 67.7bn sold, according to the Debtwire European NPLs FY20 Report. Government supported disposals accounted for 60% of the total, the report found.
The COVID-19 crisis delayed portfolio sales as Europe went into lockdown, while agreements fell apart as the economic outlook deteriorated. The maturing of the market with continued reduction of legacy NPLs also contributed to the low figure, with EUR 704bn now sold since 2015.
Italy continued its role as the biggest NPL market in 2020, selling EUR 38.9bn of loans, almost 60% of the total sold. A distant second, Greek banks closed EUR 11.7bn. However, the Greek market is set to take off this year, with EUR 27.7bn of live deals tracked by the Debtwire NPL Database .
Greece’s Hercules Asset Protection Scheme (HAPS) and Italy’s GACS have sustained sales last year, with EUR 22.3bn or a third of total sales closed under the government guaranteed securitisation schemes. The Italian asset management company AMCO also formed a big share of sales, buying EUR 11.7bn of NPLs and Unlikely-to-Pay (UTP) loans.
Approved in December 2019, the HAPS looks set to dominate the pipeline early this year, with Greek banks planning EUR 22.6bn of transactions under the scheme. Only EUR 5.1bn of Greek live deals are planned outside the scheme.
Total NPLs across the EU fell again in 3Q20, to EUR 510.5bn from EUR 526.3bn at-end 2Q20, following small increases in the second quarter. However, banks set aside record levels of provisions to prepare for the next big wave of NPLs expected to arise from the pandemic. During the first nine months of 2020, some of the largest banks in DACH, France, Greece, Ireland, Italy, Spain and the UK set aside EUR 56.2bn, more than double the EUR 24.7bn they provisioned in the first nine months of 2019.
Debtwire’s NPLs report covers loan portfolio transactions across Europe including non-performing loan and non-core loan deals typically over EUR 100m in gross book value.
Amy is a data journalist for Debtwire. She covers the sale of NPLs and non-core loans, with a focus on Southern Europe NPLs as well as Irish/UK markets and unsecured loans.
Debtwire Product Trial
Get these unique insights and more with Debtwire
Debtwire gives fixed income professionals an edge in leveraged finance, distressed debt and direct lending.
Confirm cancellation
Something went wrong.
An error occurred trying to play the stream. Please reload the page and try again.
Close