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PwC - €64bn of Europe’s non-core loans sold last year, with €80bn expected in 2014 Print E-mail
Tuesday, 25 March 2014

· UK banks top the 2013 non-core loan portfolio transaction table with €23.5bn of deals reported last year

· Commercial real estate (€18bn) and unsecured retail loans (€15bn) are the most actively traded non-core loan assets

· Non-core loan activity levels expected to reach c. €80bn across Europe in 2014

· Research by PwC shows that banks around Europe are still sitting on €2.4trn of non-core loan assets

2013 was a record year from a transaction perspective with €64bn of Europe’s non-core loans sold as part of portfolio transactions last year, a 40% increase on the previous year, according to PwC’s latest market update published today.   Increased activity levels were mainly driven by the UK and Ireland, along with Spain and Germany.

Richard Thompson, partner, PwC, commented:

“We expect that 2014 will be another record year for the European non-core loan market, with activity levels expected to reach an all-time high of around €80bn. We also estimate that loan portfolios with a total face value of more than €30bn have closed or are in the process of closing already.

“Transaction activity is fuelled by the continuing need of many European banks to reduce the size of their balance sheet and restructure their operations. Bank restructuring will continue over at least the next five years – with activity likely to be fuelled by the findings of the Eurozone wide Asset Quality Reviews (AQRs) and stress tests currently underway”

PwC estimates that banks across Europe are still holding loan assets of €2.4trn which they regard as non-core. Whilst a large number of banks are taking significant steps to reduce their exposures to these unwanted assets a continual reappraisal of their balance sheets is leading to the identification of additional orphan assets.

Richard Thompson, partner, PwC, concluded:

“Private equity and hedge funds were the most active buyers in 2013.  We expect that to continue in 2014 due to the significant amounts of investment funds raised and the availability of debt financing, especially for more established players in the sector. We are in contact with over 150 investment groups looking to invest in the European market. For 2014, we expect property-backed lending to remain the most active asset class.”

(Source - PwC Press Release)

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