Banks’ mass asset sell-off could finally break Europe’s lending freeze
A wave of deals could be a boon to the region’s economy if the banks use it to free up capital to increase new lending.
Banks across Europe have shunted more businesses, bad loans and spoiled investments into units to be sold or wound down.
Such assets jumped by 65pc since the end of 2013, to more than €1.3 trillion, according to data compiled by Bloomberg.
In recent months Irish banks have been among the most active sellers of loans, including IBRC and Nama after prices rose.
“Two years ago, everyone was talking about 20pc investment returns,” said Federico Montero, a partner at New York-based broker Cushman & Wakefield which acts as an advisor on deals.
“You started seeing in the UK and Ireland about eight to 10 months ago that, in order to win these mandates, you had to reduce your expectations a bit because there’s a lot of competition. “Returns have been compressed to the low teens or less,” he said.
“The list of deals coming in across the asset classes and markets at this point is higher than it’s ever been,” said Jody Gunderson, a senior managing director at CarVal Investors.
Banks are “driven by regulatory considerations to sell, but also market pressures for them to get back to the business of trying to produce good profits,” he said.
Private-equity firms have as much as €750bn available to buy up the loans.
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