Soaring

There is a great need for yield given the ongoing low interest rate phase. In addition, politics and regulators have identified a necessity for banks to get rid of their NPL stocks, so to be able to lend out fresh money to the real economy. Moreover, after years of burdensome discussions and implementation efforts IFRS 9 has finally been switched on and is obligatory as of January 1, 2018.

These three aspects have significant influence on the loan portfolio markets. While the IFRS 9 effects have already materialised to a certain extent in loan portfolio transactions, they will certainly continue to do so. The backstops (Minimum provisioning requirements for NPL) as set out in the addendum to the ECB-guidance on NPL and as approved by further institutions are yet to show their full effects on the markets – so are the results and consequences of the EU finance ministers’ action plan and EU Commission’s initiatives on secondary market for NPLs.

To cut a long story short: 2018 most probably will continue to be an exciting year in terms of loan portfolio transactions.

Read our Global Deleveraging Report 2017 – 2018 now. Find here the German contact of this paper.