In 2017 record volume of EUR 157bln NPLs was traded in Europe. The debt purchase market is becoming more active, with Italian and Spanish banks leading the bad debt relief process. The peak of NPL sales was in last quarter of 2017 – over 42% yoy.

Across Europe banks are under pressure to improve their stability and sell non-performing portfolios in order to achieve that. Therefore, the debt purchase market is vivid and even attracts foreign buyers. US investors including private equity firms and investment banks have stepped up their purchases of European NPLs in the past year. This year an uptake in NPL deals in Greece and Cyprus is expected.

However, there are significant differences between markets. In countries such as Ireland where the debt purchase market has been active over the past years, NPL sales are not rising. Meanwhile, in markets such as Italy, Spain and Portugal the growth and major deals are yet to come. As part of the expansion strategy in Europe the owner of Debt Collection Agency, B2Holding, entered the Spanish and Portuguese market over the past several months.

The NPLs share in Europe is decreasing over the past two years – from 7.5% in 2015 to 5% in 2017.  The generally positive figures though hide large gaps between countries across the region. While in Germany NPLs account for under 2% of the credit portfolio, in Greece the share is 43%.  Bulgaria shows significant improvement down to 10%. However, it is still among the countries with highest NPL levels.