Romania could set up bad bank to sell off underperforming property loans, Cushman & Wakefield suggests

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Romania, along with Italy and Poland will probably set up bad banks to help sell off soured property loans because others around Europe have proven successful and investor demand remains high, Cushman & Wakefield said in a report on Monday, quoted by, informs.

European banks and asset managers are seeking to sell EUR 74 billion (USD 80 billion) of real estate debt and foreclosed assets, the most ever, as they trim their soured loan books.

Vendors sold EUR 23.5 billion of property loans in the first half, 42 percent less than a year earlier. “Behind the scenes there has been a flurry of preparation work as key vendors line-up ‘mega deals’ for the second half of the year,” Frank Nickel, a partner at the broker, said in the report. “Investors will have plenty of distressed opportunities before the year is out.”

Banks in Romania have tried in recent years to get rid of problematic assets in the portfolio by selling them in structured packages for large investors. Late last year, Erste-BCR managed to sell Saturn project, an assets package with a nominal value of EUR 433 million, taken by Deutsche Bank.

The transaction of 2015 is expected to be also an assets package owned by Erste-BCR, called Neptune project with a nominal value of EUR 3.55 billion, according to Cushman & Wakefield. It will be one of the largest portfolios traded in Europe this year.

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