European banks seen offloading $109 billion of bad debt in 2015
Banks will jettison bad debts and loans that no longer fit with their business strategies, according to reports by PricewaterhouseCoopers
London: European banks will offload €100 billion ($109 billion) of unwanted loans this year to cut costs and restructure their balance sheets, according to a report by PricewaterhouseCoopers Llp.
Banks will jettison bad debts and loans that no longer fit with their business strategies, PwC said. That’s up from €91 billion last year and will be the biggest annual tally since Europe’s banks started downsizing after the financial crisis, said about 60% of more than 60 hedge funds, banks and private equity firms surveyed by PwC for the report.
Loan disposals by banks have grown every year since 2010 as scrutiny by the European Central Bank (ECB) and pressure from regulators to shore up balance sheets prompted lenders to restructure and downscale their operations. That’s provided a growing supply of assets for US investment firms including Lone Star Funds, Apollo Global Management and Oaktree Capital Group Llc, which invest in distressed assets.
“There remains very significant investor interest in acquiring banking assets as the sector continues its unprecedented and much-needed restructuring," said Richard Thompson, a partner at PwC in London. “There is significant competition between the numerous investor groups looking to acquire assets and, as a result, we’ve observed price increases in the market, making it much more attractive for banks to sell." Bloomberg
Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!