Sales of non-performing loans (NPLs) hit a four-year low last year with €67.7bn sold, according to the Debtwire European NPLs FY20 Report. The Government supported disposals accounted for 60% of the total, the report found.
The Cobid-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 €704bn now sold since 2015.
Italy continued its role as the biggest NPL market in 2020, selling €38.9bn of loans, almost 60% of the total sold. A distant second, Greek banks closed €11.7bn. However, the Greek market is set to take off this year, with €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 €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 €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 €22.6bn of transactions under the scheme. Only €5.1bn of Greek live deals are planned outside the scheme.
Total NPLs across the EU fell again in 3Q20, to €510.5bn from €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 €56.2bn, more than double the €24.7bn they provisioned in the first nine months of 2019.