European loan sales are expected to surpass €130 bn in 2016 as governments and institutional investors look to take advantage of the market recovery, according to Deloitte.
European loan sales are expected to surpass €130 bn in 2016 as governments and institutional investors look to take advantage of the market recovery, according to Deloitte.
The Deleveraging Europe report has identified 51 live and pending portfolio deals with a total value of €44.5 bn, adding it expects the vast majority to close this year.
The pipeline includes two large UK residential loan portfolio sales by UK Asset Resolution Ltd, worth a total of £24 bn (€31 bn), as well as increased sales in Italy, Spain, the Netherlands, Ireland, and the CEE and SEE regions.
Italy has sharply increased its deleveraging activity in response to more positive investor sentiment, completing sales of €17.3 bn in 2015 which Deloitte believes could increase to €25 bn in 2016. The Netherlands is also expected to be active in the first half of the year as Propertize brings its €5.5 bn Project Swan portfolio to the market.
Deloitte said the anticipated increase from 2015’s record annual disposals total of €105 bn is largely the result of government and privately owned institutions looking to sell off their legacy assets from the crisis as market conditions improve.
Deloitte also said that while the core markets are reaching maturity others are yet to be unlocked, including Greece, where it expects at least €29 bn in transactions to be concluded between 2017 and 2019.
‘We expect the increasing trend of deleveraging from European financial institutions to continue as they tackle over €2 tln of non-core and non-performing assets,’ said David Edmonds, global head of Deloitte’s portfolio lead advisory services.
‘Increased regulation and capital requirements for banks and insurance companies as a result of Basel III, Solvency II and in the future IFRS9 continue to stimulate divestitures.
‘Regulatory pressures aside, the market are forcing the financial sector to accelerate the retreat to home markets and place a stricter focus on core businesses and strategic direction. This will undoubtedly drive higher levels of activity in the market.’
Overall Deloitte recorded 123 completed loan deals in 2015 worth €104.3 bn. Loans secured by commercial real estate and residential accounted for €37.7 bn and €36.7 bn respectively, or 36.1% and 35.2% of the market.
The top five vendors accounted for half the total volume. UKAR sold €17.9 bn, GE Capital sold €12.9 bn, NAMA sold €11.3 bn, Permanent sold €5.5 bn and Ulster Bank sold €5 bn.