In 2020 total sales of European NPLs amounted to €67.7bn, according to the Debtwire European NPLs FY20 Report. Transaction volumes in 2020 were the lowest since 2015.

The COVID-19 crisis delayed portfolio sales as Europe went into lockdown, while agreements fell apart as the economic outlook deteriorated, experts explained.

Italy continued its role as the biggest NPL market in 2020, selling €38.9bn of loans, almost 60% of the total sold. A distant second, Greek banks closed €11.7bn in FY2020, according to the report. However, the Greek market is set to take off this year, with €27.7bn of live deals tracked by the Debtwire NPL Database. Spain sold NPLs exceeding €6bn, and the UK’s sales of NPL amounted to almost €4bn.

Governments in the EU countries have launched state-guaranteed programs to help local banks reduce their share of non-performing loans. Greece’s Hercules Asset Protection Scheme (HAPS) and Italy’s GACS have sustained sales last year, with €22.3bn or a third of total sales closed under the government guaranteed securitisation schemes. The Italian asset management company AMCO also formed a big share of sales, buying €11.7bn of NPLs and Unlikely-to-Pay (UTP) loans, according to the Debtwire European NPLs FY20 Report.

Approved in December 2019, the HAPS looks set to dominate the pipeline early this year, with Greek banks planning €22.6bn of transactions under the scheme. Only €5.1bn of Greek live deals are planned outside the scheme.

Total NPLs across the EU fell again in 3Q 2020, to €510.5bn from € 526.3bn at-end 2Q 2020 (see the chart 📉 below 👇). However, banks set aside record levels of provisions to prepare for the next big wave of NPLs expected to arise from the pandemic. During the first nine months of 2020, some of the largest banks in DACH, France, Greece, Ireland, Italy, Spain and the UK set aside €56.2bn, more than double the €24.7bn they provisioned in the first nine months of 2019, the Debtwire’s experts said.