EU banks carry vast non-core loans

European banks are carrying over €1.3 trillion (£1.15 trillion) in non core loans, according to new information published by PwC today.

These loan portfolios consist of both performing and non performing loans (NPLs), which PwC says the banks will spend the next 10 years either running off or selling.

NPLs in the UK topped €175bn for 2010, an increase of 13 per cent from 2009. Germany topped the European NPL table with €225bn outstanding, with Ireland in third place with €110bn and Spain fourth with €100bn.

The quantity and pace of loan sales will vary for each country, with those under the most pressure such as Ireland and Spain being encouraged to shift loans within 12-36 months.

Richard Thompson, partner at PwC, said: “Corporate loan books that aggressively expanded over a short number of years will take the longest to unwind. It is no coincidence that it has been the more homogeneous, higher quality, portfolios that have come to market so far.”