Irish banks experience rise in value of non-performing loans

Ireland is among six European countries that are reporting more than €100 billion in non-performing loans in their banking systems, according to the latest market update from PricewaterhouseCoopers on the issue.

Banks based here saw the value of non-performing loans rise to €135 billion in 2012, from €107 billion the previous year. Top of the PwC analysis came Germany with €179 billion, the same level as in 2011. Next came the UK, Spain, then Ireland, followed by Italy and France.

For Ireland, the analysis said the sale of loans in 2013 was expected to exceed the previous year’s sales, with the potential sale of the Irish Bank Resolution Corporation’s loans significantly increasing the volume through 2014.

PwC partner Aidan Walsh said the departure of a number of banks from the Irish market would give a boost to the trade in non-performing loans and he expected to see a lot more activity over the coming two years.

“Whilst the major US funds are the most active, we are seeing increased interest from other sources, including sovereign wealth funds and far eastern investors. We know of over 150 different investor groups who are taking a close interest in this market.”

He said trade in the loans would remain a buyers’ market for some time and this would almost certainly lead to a surfeit of assets coming to market in 2014, with a consequent impact on price.