British banks are leading the way in disposing of unwanted loan portfolios, according to a new report out today from PwC.
Analysts from PwC’s portfolio advisory group found that European banks are disposing of unwanted loan portfolios at record rates and performing portfolios are becoming increasing popular, with investment in UK-held assets accounting for more than half of all investment across Europe. PwC found that in the first half of this year, the total transaction value across Europe has come in at about €75bn (£53.5bn) and could reach as much as €160bn by the end of the year, a 75 per cent increase compared to €90bn in 2014.
PwC also said that around 40 per cent of all deals this year would be accounted for by sales from UK financial institutions, adding that the UK is also on track to be the leading market for sales of performing assets rather than non-performing assets. In other words, in cash terms, the value of investment in UK-held assets will amount to closer to 60 per cent of the total investment volume in loan portfolio assets across Europe, PwC said.
Commenting on the findings, Richard Thompson, global leader of PwC’s portfolio advisory group said: “Investors are increasingly looking to securitisation as a possible exit to take advantage of ever tightening spreads in the debt capital markets, particularly in the residential mortgage space.”
“Banks continue to hold around €2 trillion of unwanted loans. However, the recent influx of performing portfolios onto the market indicates this estimate could be understated as banks consider more strongly the disposal of non-strategic performing portfolios,” he added.