After the intervention of all the competent bodies to alleviate the effects of the Covid crisis on the European business and financial system, the next few months will be different, at least in terms of the bad loan market, whether they are NPL’s or REO’s, they point out. The experts.
“We are seeing defaults on the first ICO loans. Those that will arrive will be commercial, tourist and leisure; the most damaged sectors, ”says Íñigo Merladet, strategy & divestments RGI at Banco Santander, at the ‘NPL Management Europe 2021’ event that was held a few days ago in Madrid.
Guillermo Barquin, partner of the consultant PwC, completes: “Covid-19 has brought a new product to be managed by banks. Many governments injected liquidity into the real economy and new product will come to our hands; but slower than we expected“.
More specifically, he explains: “We are waiting for the arrival of new NPL’s portfolios, the majority, corporate. The lower demands of the regulators regarding supplies has meant that, in the last two years, fewer portfolios have arrived than we expected ”.
Intrum’s business development director, Antonio Fernández, points out one of the great challenges for the managers of these NPLs: their more efficient management.
“All the servicers they depend on external brokers. You can be the best servicer of the world, but you don’t sell the assets to investors. We have to focus on how to improve sales channels to give value to assets. In line with this, he adds: “We are looking for different solutions so as not to depend on third parties. Those who best control the marketing channels are going to be the favorites to sell liquid and illiquid assets ”.
The secondary market, an option
This new movement is already reflected in the transactional business where some players They have carried out various operations in secondary markets. “At Intrum, we have purchased a secured portfolio from Cerberus. We have an investment appetite. There are opportunities and there are investors like us doing it“, Confesses Antonio Fernández.
In this regard, the PwC partner adds: “The players They prefer to buy in the primary market because in the secondary market it is impossible to buy cheaply and they have a higher risk. Those who bought well are selling on the secondary market ”.