The volume of non-core assets held by banks across Europe has remained largely unchanged since the beginning of 2012 – despite the massive balance sheet deleveraging they have undertaken.
PwC estimates that non-core loan assets total €2.4 trillion, which is just €0.1 trillion less than at the beginning of 2012.
Although banks have made significant efforts to deleverage, the face value of lending that had been run off or sold was almost fully offset by the €500bn of new non-core loan assets that banks added to the overall pool during 2012.
Nearly all of Europe’s top 50 banks now have a non-core division or equivalent. And many markets have seen significant loan portfolio transactions over the past 12 months, with the UK, Germany and Spain each accounting for around €10bn.
Richard Thompson, chairman of PwC’s European portfolio advisory group, said: “European banks are now becoming more transparent in relation to the size of their non-core portfolios and deleveraging efforts.
“The €500bn of new non-core assets identified during 2012, compared with the €600bn of loan deleveraging completed during the same year, confirm our estimate that the European deleveraging process will last for, at least, another 10 years, and that loan sales are bound to increase further.”
Sally Percy is editor of The Treasurer