Romania continues to be a regional leader in NPL portfolio transactions in 2017

The most active CEE markets with the highest volumes of non-performing loan portfolios (NPL) sold in recent years were Romania, Hungary, Croatia as well as Slovenia, according to the sixth edition of Deloitte’s report on NPL

Although corporate NPLs are still the most actively traded loan portfolios, some investors have already turned their interest towards residential mortgages.

“An already mature market in CEE region, Romania has continued to be one the leaders of NPL transactions during both 2016 and 2017. This is mainly the result of the fact that NPL disposals processes started way ahead of other countries in CEE,” stated Radu Dumitrescu, Head of Transaction Services in Deloitte Romania.

Considering the twelve countries in the CEE region (excluding Ukraine and Bosnia & Herzegovina) covered by Deloitte’s report, the volume of non-performing loans saw a considerable decrease from EUR 51 billion in 2015 to EUR 44 billion in 2016.

Changes related to taxation and the GDPR implementation are the main factors that will influence the Romanian NPL market in 2018.

“The first part of the year will most probably witness extremely low level of transactions as most of the sellers are very likely to put on hold transactions until situation will clarify. However, I expect in the second half of the year the NPL disposal processes to re-start and banks to continue to dispose NPL portfolios. Another aspect to watch for in the forthcoming years in Romania is definitely the development of the secondary NPL market and <large cases> transactions,” Dumitrescu said.

Deloitte predicts that the sale of non-performing assets will remain the most common deleveraging option among banking industry players in the CEE region in 2018. However, with a number of corporate NPL transactions completed in the recent past, sale of residential mortgage portfolios is expected to increase in many countries.