Brewing Trouble- Europe’s Non Performing Loans Hit 1.2 Trillion Euros

The uncertainty that loomed due to the economic depression recently, seems to still have an effect in the recovering European economies. The gross non-performing loans (NPLs) across banks in Europe have incremented to a staggering €1.2 trillion, thanks in large parts to the NPL contributions from Italy, Greece, Spain and Ireland. Worse, experts unanimously believe that these NPL numbers will not decrement to manageable limits, anytime soon.

Infact, the levels will most likely increase further in the coming years, adding further to an already battered European market.While the situation improves in the rest of the world, Europe is looking towards a fight of gigantic proportions.

The situation is an even menace across the members of the European Union. Countries like the UK, Germany, Spain, Ireland, Italy and France had reported NPLs in excess of 100 billion Euros in their individual banking systems at the end of 2012- a cumulative 900 billion Euros in these six countries alone. From January- August 2013, the total NPL generated by the European economies has equalled the entire deficit for 2012 at 46 billion Euros. As per the most informed forecast, 2013 was expected to generate a total of 60 billion Euros in non-performing loans. However, looks like this prediction will take a severe beating.

Competition across the European markets is ripe, with a large number of transactions happening at the moment. Also, the demand for investors for all asset classes is sky-rocketing. Commercial real estate (15 billion Euros) and unsecured retail loans (10 billion Euros) have emerged as the most actively traded loan portfolios in Europe this year. UK heads the list with an estimated 13 billion Euros in transactions through 2013, a significant hike as compared to 10 billion Euros for the entire 2012. Again, commercial real estate loan transactions at 4 billion Euros are the major contributor.