Notable exceptions to this trend include Greece and Spain where opinion is fairly evenly divided as to whether IRRs will increase or decrease in the next two years.
“As the securitisation markets in general continue to open up across Europe following increased activity over the past 12 months, we can expect to see a continued increase in the use of securitisation structures for NPL resolution going forward.”
In each nascent NPL jurisdiction, primarily in Europe, the principal impediments have been the all-important “bid-ask spread”, data quality and insufficient sell-side resources. While those factors clearly still remain, our research suggests that the sell-side community is now finding transaction costs and reputational concerns as more pertinent considerations when bringing NPLs to market.
Therefore, while hospitality assets represent attractive growth potential for investors, there can be an understandable reluctance among sellers to dispose of assets in this sector
In the aftermath of the global financial crisis, NPL transactions were a boardroom priority and budgets, in general, were simply “found”.
In general, there is less appetite for significant outlays. The increased use of securitisation-based structures in some markets also inevitably generates higher transaction costs given the complex structuring required for these types of transaction.
Now, in a more mature market, NPL resolution is perhaps viewed as more business-as-usual and commoditised (with the exception of financial institutions located in jurisdictions with high NPL ratios that are subject to intense regulatory scrutiny and targets to fix their NPL problem)
Reputational concerns are another indication of an increasingly mature market. In recent years, European economies have generally been recovering and individual banks are progressing through their NPL resolution programme Parsons payday loan and cash advance. In the mature Western markets, some banks have concluded their processes altogether. Continue reading “The process of preparing loan books for sale has always been resource and time intensive for financial institutions”