The sale of non-performing loans and non-core assets, otherwise classified as unwanted loans, should increase by roughly 63 percent year-on-year in 2015, according to a new report from advisory firm Deloitte.
Sales are expected to top €150 billion, up from €93 billion in 2014, driven by increased loan sale activity in continental Europe, particularly Spain, Italy and Central and Eastern European countries.
Loan sale values in Italy are forecast to grow by 190 percent. In the CEE, loan sales are predicted to quadruple compared to 2014, Deloitte said.
The year got off to a slow start with only €35 billion of sales completed to date. Another €75 billion of transactions are in the pipeline though and a further €42 billion of loans are rumoured to be in the market before year-end.
Debt investors have reportedly raised around €100 billion in the past 18 months targeted for Europe, the firm said. If adding leverage, this could equate to €300 billion in cash ready to deploy.
“2014’s figure was already a three-fold increase on 2013’s, and we expect to end this year even higher,” David Edmonds global head of portfolio lead advisory services at Deloitte, commented.
“In the past, these sales have been driven by commercial real estate loans, but now we are seeing more residential mortgages being sold off in improving markets and the emergence of SME corporate debt packages,” he continued.
Sales by UKAR and GE this year boosted numbers in the UK, underpinning the residential mortgage focus of that market, he highlighted. “Distressed debt investors and challenger banks are willing to step up and buy these loans, be they non-core or non-performing loans, on the basis they will start performing in the future as the economy improves.”
This year, Deloitte estimates loan sales to top £35 billion in the UK, €21 billion in Italy, €22 billion in Spain, €8 billion in Austria and CEE and €29 billion in Germany.