EUROPEAN banks are still looking to offload some €2.5 trillion in non-core assets, according to research released today by PwC, suggesting that the region will have to suffer through a flood of more deleveraging before it can produce sustained growth again.
But PwC also estimates that lenders will try to jettison loans with a face value of around €50bn, indicating that banks are trying to hold onto their unwanted assets until their values rise.
But in a worrying sign about the hangover of toxic assets from the financial crisis, the research also suggests that lenders are holding around half a trillion euros of non-performing loans, on which banks will have to take some kind of loss.
The research is supported by an uptick in non-performing loans showing up in bank’s fourth quarter results, particularly in peripheral Eurozone economies.
PwC partner Richard Thompson said: “While the main markets for transactions over the next year are likely to be Spain, the UK and Ireland, we expect increasing activity in some of the other European markets, including Germany and Italy.”
