Irish banks fourth-largest seller of loans in Europe

Irish banks accounted for the fourth-greatest number of loan sales, by value, in Europe in the first six months of 2015, new research from PwC shows.

With some €7.5 billion in loan sales, Ireland was behind the UK (€13.5 billion), Germany (€18 billion) and Italy (€8 billion), as PwC reported European banks are disposing of unwanted portfolios at a record rate in the face of new capital rules.

In the first half of this year, loan sales with a face value of some € 55 billion were transacted, an increase of 20 per cent on the same period in 2014. With a reported €84 billion in loan sales understood to be in progress across Europe, PwC is forecasting a full-year out-turn of some €138.5 billion, an increase of 53 per cent on 2014.

Retail loans

In Ireland, in the first six months of 2015, some €7.5 billion in loan sales were completed, with a total €11 billion in progress, according to the PwC report. More than half of these were secured retail loans, with a third of these for commercial real estate, and SME/corporate loans accounting for a further €1 billion. Loans transacted during the first half of the year include the sale of two

National Asset Management Agency

portfolio transactions as well the sale by

Permanent TSB

of half of its UK residential portfolio to Cerberus for €3.5 billion.

The figures for Ireland mean the likely out-turn for 2015 at €18.5 billion will be down by about 40 per cent on 2014, when some €30.5 billion in loan sales were transacted, but up on 2013 (€4 billion).

Nama is the most active Irish seller so far in 2015, PwC says, with a reported four portfolio transactions currently in the market, including the €7.2 billion Project Arrow, Nama’s largest to date.

From 2010-2014, European banks have disposed of loan portfolios with a total face value of €250 billion, with the UK and Ireland accounting for half of this total, followed by Spain (€45 billion). This is “no surprise” the PwC report says, given that banks locally have been very active in cleaning up their balance sheets.

Regulatory reforms

PwC predicts the UK and Ireland will have another “strong year” in 2015, but says it will be Italy that will be the talking point “as the market responds to regulatory reforms and increasingly high trends of investor appetite”.

PwC says loan portfolios backed by real estate will be the most-traded asset class, with 80 per cent of all transactions so far this year being residential mortgages or lending backed by commercial real estate.