European NPL sales hit record €205b in 2018

Europe’s banks offloaded a record volume of bad loans and assets last year with disposals totalling €205.2 bn.

A report by Debtwire ABS, published on Thursday, says the European NPL market reached a new peak in 2018 with 142 transactions. The majority were backed by commercial or residential real estate or were made to real estate customers.

The record level was driven by Italian banks which produced half the activity by both volume and number of deals: they made 64 closed sales with a gross book value of €103.6 bn during the year.

Italy has been one of the slowest countries in Europe to tackle its mountain of sour real estate loans. It has been under pressure from European regulators, including the European Banking Authority, to clean up its banks’ books.

Almost half of the Italian deals identified by Debtwire were via securitisations within the domestic government’s Garanzia sulla Cartolarizzazione delle Sofferenze (GACS) scheme, which only runs until 6 March 2019.

The last quarter of 2018 was particularly busy across Europe with sales closed worth more than €75 bn.

Southern European banks overall were the most active throughout the year, with €43.2 bn of sales closed in Spain across 27 deals. ‘Most of these involved two jumbo buyers, Cerberus Capital Management and Lone Star’, the report says.

Cerberus was the top buyer overall in Europe, buying €29.7 bn of distressed assets.

Greece saw eight sales last year, totaling €13.9 bn, with two of those large secured real estate transactions: Piraeus Bank’s ‘Project Amoeba’, bought by Bain Capital; and ‘Jupiter’ which Alpha Bank sold to Apollo Global Management.

Portuguese banks closed 16 NPL and non-core asset deals, with a gross book value of €8 bn.

Continuing EBA scrutiny means 2019 is also expected to be a busy year, the report says, although the volume will not be repeated.

Alessia Pirolo, head of NPL coverage, Debtwire, said: ‘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.’


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