UK sales down 87% as European NPL disposals plummet
European non-performing loan sales fell by 44% to €49.4bn (£43bn) in 2016 amid economic volatility across the continent, according to Evercore’s latest European Distressed Real Estate Market report.
With €12.1bn in NPL transactions, Ireland was the most active market in Europe and the National Asset Management Agency was the biggest seller, disposing of €9.4bn of loans. Given these volumes, the report predicted 2017 would be the final year for large-scale loan sales by the Irish bad bank.
European non-performing loan sales fell by 44% to €49.4bn (£43bn) in 2016 amid economic volatility across the continent, according to Evercore’s latest European Distressed Real Estate Market report.
With €12.1bn in NPL transactions, Ireland was the most active market in Europe and the National Asset Management Agency was the biggest seller, disposing of €9.4bn of loans. Given these volumes, the report predicted 2017 would be the final year for large-scale loan sales by the Irish bad bank.
Ireland as a whole has cut the value of its NPL portfolios by 63% since 2012, with total sales of €62.8bn.
US private equity firm Cerberus was the biggest buyer of European NPLs for a third consecutive year, completing €9.4bn of deals, including Permanent TSB’s €3bn Project Ravenhill and Nama’s €2.7bn Project Gem.
However, those numbers reflected a significant fall from the past two years, when total annual volumes in Europe topped €80bn.
There were only nine deals of more than €1bn last year, compared with 15 in 2015 and 16 the year before.
The UK saw a broadly anticipated 87% decline in sales from 2015, the market having been highly active and mature shortly after the financial crisis.
The report said that although the slowdown was due in part to high levels of disposals in the past leading to fewer loans to sell, particularly in the UK and Ireland, it also reflected the caution the industry felt towards Europe in the second half of 2016.
The report said: “Although it was always unlikely for activity in 2016 to surpass that of 2015, the fall was more significant than anticipated. With sales in the UK and Ireland starting to dry up, it was expected that Spanish and Italian lenders would fill the gap.”
Spain still has €186bn in gross non-core real estate exposure, after having sold €39.5bn since 2013. In comparison, Ireland sold €72bn in the same period.
Evercore said it expected Spain’s activity to pick up this year and lead Europe in completed deals.
The UK is likely to have little activity in 2017, other than UKAR, which is selling a £16bn portfolio of mortgages and could deliver the biggest deal of the year if the sale is completed.
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