Europe's banks step up sales from $3 trillion "non-core" loans

LONDON, March 25 Mon Mar 24, 2014 8:01pm EDT

LONDON, March 25 (Reuters) - Europe's banks are set this year to sell a record 80 billion euros of loans no longer part of their main businesses, as they step up sales from 2.4 trillion euros ($3.3 trillion) of loans deemed "non-core".

PwC estimated on Tuesday that European banks will sell a quarter more non-core assets this year than the 64 billion euros sold in 2013, which was up 40 percent from 2012.

It said 30 billion of loans had already been sold this year or were in the process of closing.

"Bank restructuring will continue over at least the next five years - with activity likely to be fueled by the findings of the Eurozone wide asset quality reviews (AQRs) and stress tests currently underway," said PwC partner Richard Thompson.

Europe's banks have been selling loans to shrink balance sheets that were bloated during the run up to the financial crisis. Many have restructured and separated businesses and loans they no longer want.

Banks in Britain, Ireland, Germany, Spain and elsewhere continue to sell commercial property loans, credit card portfolios, or more specialised loan books, such as shipping. Regulators are also currently assessing assets held by eurozone banks, prompting some lenders to accelerate sales.

Thompson said private equity and hedge funds were the most active buyers of these non-core assets in 2013. That is expected to continue this year as they have funds to invest and can get financing in debt markets.

PwC said British banks sold 23.5 billion euros of non-core loans last year, more than any other country and led by sales by part-nationalised Lloyds Banking Group.

Banks in Belgium sold 11.5 billion euros of loans and those in Germany and Spain sold about 10 billion apiece.

Commercial real estate loans accounted for 18 billion euros of the assets sold, swelled by sales by UK and German banks, followed by 15 billion euros of unsecured retail loans, largely due to increases in Britain and Spain.

($1 = 0.7256 Euros) (Reporting by Steve Slater; Editing by Tom Heneghan)