Portfolio Advisory Group Market Update – Q1 2015 · 2017-10-19 · We expect that completed loan portfolio transactions will reach €100bn in 2015 2014 was a record year for portfolio

Portfolio Advisory GroupMarket update Q1 2015

May 2015

This publication has been amended since publication to provide further explanation concerning our analysis of NPLs by country

Welcome to our Q1 2015 market update. In addition to the transaction market overviews, we summarise here some of the responses from buyers and sellers to the questions posed during our recently held conference.

2015 has got off to a strong start and the signs are good for another busy year in the transaction market. €20bn of portfolios have already transacted in the year, around 20% up on this time last year, and with €39bn of portfolio transactions in progress the European markets are showing no signs of slowing down.

March saw us host our annual bank restructuring conference. As evidence of the continued and rising interest in the market, more than 600 market participants took part in a lively debate with the 32 panellists. During the conference we asked delegates for their views on a range of portfolio transaction issues, as well as wider regulatory and economic questions.

An interesting theme that we have predicted for a while now, and had confirmed to us during the conference, is the expanding horizons of investors, venturing into less mature European markets in search of higher rates of return than can be achieved compared to the very competitive markets of the UK, Spainand Ireland.

Italy, CEE and Greece were all discussed in detail as the next potential markets for portfolio transaction growth and with Italy now topping the NPL league table (see next page) it is easy to see why. 55% of investors believed that CEE would be the next investment hotspot above Greece,Scandinavia and Benelux.

With investors now beginning to focus on these less mature portfolio markets, the banks will begin to come under increasing pressure to deleverage their balance sheets, particularly once increased competition on portfolio transactions narrows the bid-ask gap which has so far been a barrier to sale for a number of institutions.

As always, we hope this edition of our Market Update provides food for thought on what is happening in the portfolio transaction market and the direction in which the industry is heading.

If you would like to discuss any aspect of the market please contact me, Jaime Bergaz or any one of our colleagues listed on the back page.

European NPL outlook and transactions in key markets

Richard Thompson

Chairman,European Portfolio Advisory Group

2 Portfolio Advisory Group | Market update

Portfolio Advisory Group | Market update 3

Emerging trends and insights across Europe in 2015As well as providing an update on NPL volumes, below we share some unique insight from the results of polling attendees at our annual conference

In billions EUR 2010 2011 2012 2013 2014

Italy 78 107 125 156 184

Spain 111 136 167 197 173

Germany 192 179 179 157 152

France 133 133 125 122 142

United Kingdom 172 172 164 136 107

Ireland 109 119 135 130 98

Greece 27 40 56 77 90

Netherlands 52 52 57 55 55

Russia 32 34 39 39 34

Cyprus 6 9 18 27 29

Portugal 10 12 17 19 20

Poland 15 15 17 17 17

Austria 17 18 21 19 16

Turkey 11 9 11 11 14

Denmark 16 17 15 14 10

Romania 5 6 11 11 8

Hungary 5 7 8 8 7

Ukraine 11 12 16 14 7

Czech Republic 5 5 6 5 6

Sweden 8 7 6 5 4

Norway 4 4 5 5 3

Slovakia 2 2 2 2 2

Finland 1 1 1 2 2

Total 1,022 1,096 1,201 1,228 1,180

UK/Ireland52% of respondents believed that non-core would remain a feature of the UK economy for up to four more years.

CEE45% of respondents believe that Poland will provide some of the best investment opportunities within CEE.

Spain65% of respondents still believe transaction volumes had not yet fully matured in Spain.

Italy69% of respondents believe an Italian “bad bank” should be created.

GreeceDespite economic turbulence, 71% of respondents did not believe that Greece would exit the Euro.

The above estimates of NPLs by country are based on PwC analysis of public data sources including data from various central banks and financial statements or presentations. We are aware that other summaries published include different balances

to the ones presented above. Our estimates are calculated based on the information available as at the date of publication and we are aware that more information becomes available over time. The data should therefore be regarded as indicative in

nature. In the interests of comparability we have not sought to restate prior year numbers. In a number of cases we estimate NPL volume by reference to data from the largest institutions in the country and do not attempt any extrapolation. It should

also be noted that the above figures do not include non-performing exposures, when these can be separately identified.


Completed; €20bn

CRE; €13bn

CRE; €18bn

CRE, €48.5bn

Secured Retail; €6bn


Secured Retail; €18,5bn

Unsecured Retail; €10bn


Unsecured Retail, €13.5bn

SME/Corporate; €3bn

SME/Corporate, €4.5bn

SME/Corporate; €9bn

Specialised; €14bn

Specialised, €17.5bn

Specialised; €1,5bn

In progress, €39bn

Estimated, €41bn

-

10

20

30

40

50

60

70

80

90

100

2012 2013 2014 2015

Face V

alu

e (€b

n)

€46bn

€64bn

€91bn

€100bn

We expect that completed loan portfolio transactions will reach €100bn in 20152014 was a record year for portfolio transactions in Europe, and with €59bn completed or in progress so far in 2015, this is set to be another strong year

Source: PwC analysisNote: Based on the location of the head office of the bank selling the assets

Note: “Specialised” includes certain structured and asset backed products, shipping, infrastructure, energy and aviation

€64bn

€91bn

€100bn

€46bn

Approximately €10bn of the completed transactions occurred in the UK and

Ireland, with the remainder occurring in Germany and the Netherlands.

Over half of the transactions in progress are

CRE, primarily in the UK, Germany and the

Netherlands.

Completed; €20bn

UK; €10bn

UK, €23.5bnUK; €21,5bnIreland; €3bn

Ireland; €2bn

Ireland; €30,5bn

Spain; €9bn

Spain, €9.5bn

Spain, €21bn

Germany, €10bn

Germany, €10bn

Germany, €6bn

France; €9bn

Belgium, €11.5bn

Italy; €4bn

Italy; €5bn

Italy, €7.5bn

Netherlands, €2bn

Other; €1bn

Other, …

Other, €4.5bn

In progress, €39bn

Estimated, €41bn

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10

20

30

40

50

60

70

80

90

100

2012 2013 2014 2015

Face V

alu

e (€b

n)


CRE; €1bnCRE; €2bn

CRE, €25.5bn

CRE, €1.5bnSecured Retail; €0,7bn

Secured Retail, €2bn


Unsecured Retail; €1bnSME/Corporate; €0,3bn

SME/Corporate, €3bn

Specialised; €0,5bn

In progress; €11bn

-

5

10

15

20

25

30

35

2012 2013 2014 2015

Face V

alu

e (€b

n)

CRE; €6bnCRE; €5bn

CRE, €14.5bn

CRE, €5.5bn






SME/Corporate; €2,0bn



Specialised, €1bn

Specialised, €5bn Specialised; €0,4bn

In progress, €9.5bn

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5

10

15

20

25

30

35

2012 2013 2014 2015

Face V

alu

e (€b

n)

2015 year-to-date deals in key markets



IrelandUK

€10bn

€21.5bn

The portfolio transactions completed in Q1 2015 are largely

attributable to two predominantly non-performing CRE portfolios.

€3bn

€2bn

€30.5bn

€23.5bn

€15bn

€16.5bn

Approximately €9bn of the deals in progress are from the wind-

down of NAMA, predominantly Project Arrow.

We are seeing increasing levels of secured retail portfolios coming to

market, partly due to the high price they command. Performing

secured retail portfolios are now beginning to attract bids in excess

of par.

PTSB has been the first Irish seller of portfolios in 2015, with

significant CRE and secured retail portfolios trading in Q1 (Project

Leinster and Munster).


CRE; €0,5bn



Secured Retail, €8.2bn



Unsecured Retail, €6bn





In progress, €5.5bn

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5

10

15

20

25

2012 2013 2014 2015

Face V

alu

e (€b

n)

CRE; €5bn

CRE; €9bn

CRE; €5,5bn

CRE; €2,5bn


Secured Retail, €0.5bnUnsecured Retail, €0.2bn

Specialised, €5bn

Specialised, €0.5bn

In progress, €5bn

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5

10

15

20

25

2012 2013 2014 2015

Face V

alu

e (€b

n)

€10bn €9.5bn

€21bn

€7bn




€10bn €10bn

€6bn

SpainGermany

The transactions in progress include two Commerzbank CRE

portfolios with a face value of approximately €3.5bn.

€7.5bn

Secured and unsecured retail portfolios continue to dominate the

Spanish market and we expect these asset classes to continue to trade

throughout 2015.

CRE continues to be the most popularly transacted asset class in the

German market, with much of the Q1 2015 volume attributable to

Deutsche Bank’s majority sale of a €2.5bn US CRE portfolio.







Unsecured Retail, €2.5bn

Unsecured Retail; €5,5bn

Unsecured Retail, €1bn

SME/Corporate, €2bn


In progress, €3bn

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1

2

3

4

5

6

7

8

2012 2013 2014 2015

Face V

alu

e (€b

n)

CRE, €2bn



SME/Corporate, €3bn In progress, €1bn

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1

2

3

4

5

6

7

8

2012 2013 2014 2015

Face V

alu

e (€b

n)


Italy



Netherlands

<€1bn

€2bn

The Dutch market has had a strong start in 2015, with a number of

residential mortgage transactions completing in the first quarter.

€2.5bn

€4bn

€5bn

€7.5bn

€6.5bn

There are a number of transactions in progress

in Italy already. Given the volume of completed

transactions in 2014 and sharp increases in NPL

figures, we expect Italy to be a growth market

for investors.

€3.5bn

Contacts

This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this publication without

obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by

law, PricewaterhouseCoopers LLP, its members, employees and agents do not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act,

in reliance on the information contained in this publication or for any decision based on it.

© 2015 PricewaterhouseCoopers LLP. All rights reserved. In this document, "PwC" refers to the UK member firm, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please

see www.pwc.com/structure for further details.

150424-145754-DF-UK

Richard Thompson+44 20 7213 [email protected]

Jaime Bergaz+34 915 684 [email protected]

AustriaJens Roennberg+49 699 585 [email protected]

Bernhard Engel+43 150 188 [email protected]

CEEJonathan Wheatley+40 212 253 645 [email protected]

CyprusStelios Constantinou+35 725 555 [email protected]

Czech Republic and SlovakiaPetr Smutny+42 025 115 [email protected]

DenmarkBent Jørgensen+45 394 592 [email protected]

FranceHervé Demoy+33 156 577 [email protected]

FinlandHarri Valkonen+35 840 539 [email protected]

GermanyChristopher Sur+49 699 585 [email protected]

Thomas Veith+49 699 585 [email protected]

GreeceEmil Yiannopoulos+30 210 687 [email protected]

HungaryMiklos Fekete+36 146 192 [email protected]

IrelandAidan Walsh+35 317 926 [email protected]

ItalyAntonella Pagano+39 028 064 [email protected]

The NetherlandsPeter Wolterman+31 887 925 [email protected]

Joris van de Kerkhof+31 887 927 [email protected]

NorwayLars Johansson+47 (0) 481 617 92 [email protected]

PolandLukasz Bystrzynski+48 22 523 [email protected]

PortugalAntonio Rodrigues+35 121 359 [email protected]

RomaniaCornelia Bumbacea+40 212 253 [email protected]

SpainJaime Bergaz+34 915 684 [email protected]

Guillermo Barquin++34 915 685 [email protected]

Pablo Martinez-Pina+34 915 684 [email protected]

Richard Garey+34 915 684 [email protected]

Antonio Fernandez+34 915 684 [email protected]

SwedenPer Storbacka +46 855 533 [email protected]

TurkeyAykut Tasel+90 212 355 [email protected]

UkraineVladimir Demushkin+38 044 490 [email protected]

United KingdomRichard Thompson+44 207 213 [email protected]

Robert Boulding+44 207 804 [email protected]

Chris Mutch+44 207 804 [email protected]

Ben May+44 207 212 [email protected]

Chiara Lombardi+44 207 213 [email protected]

Patrizia Lando+44 207 804 [email protected]

North AmericaMitchell Roschelle+16 464 718 [email protected]

Jeff Nasser +12 673 301 382 [email protected]

Asia PacificTed Osborn+85 222 892 [email protected]

AustraliaAnthony Boswell+61 826 625 51 [email protected]

Latin AmericaNico Malagamba+55 119 997 [email protected]

JapanMasahiro Komeichi +81 904 137 [email protected]

Documents

Portfolio Advisory Group Market Update – Q1 2015 · 2017-10-19 · We expect that completed loan portfolio transactions will reach €100bn in 2015 2014 was a record year for portfolio