Up to €1.28tn in euro zone bank loans eligible to be sold

Euro zone banks may have 1.28 trillion in loans eligible to be packaged and sold to investors, freeing up money to lend, according to Credit Suisse Group analysts.

About 8 per cent of the loan books of the region’s banks, mainly financing to businesses, could be securitised, the analysts, led by Carla Antunes-Silva, said in a note.

A resulting balance-sheet relief of about €440 billion may spur banks to lend more to small and medium-sized companies, noting they don’t expect all the loans to be securitised.

“From a capital perspective, securitization favors growth of the SME market as it helps banks to transfer credit risk to the investors, in turn freeing up capital for additional lending,” Credit Suisse said.

Sales of asset-backed securities will jump next year by the most since 2007, to €115 billion, Credit Suisse said in a separate note this month.

The European Central Bank is purchasing the securities as part of stimulus measures to persuade banks to increase lending and boost growth.

The asset- backed debt market in Europe came to a halt after the financial crisis as banks stopped selling the debt after regulators blamed the securities for worsening the situation in 2008.

Credit Agricole, Natixis and Banco Santander would be able to generate the most new lending from selling bundled debt in absolute terms, the analysts said.

ING Groep, Bank of Ireland and Eurobank Ergasias would be "the leading gainers" measured by percentage of existing loans, they said.

Bloomberg