Looking at the most recent data in the European Banking Authority quarterly Risk Dashboard (published on 5 October 2020), it becomes abundantly clear that COVID-19 is beginning to manifest itself in the NPL market with the cessation of the multi-year declining trend in NPL levels. The NPL tide has clearly changed, and if you consider the new crop of NPL’s when coupled with those legacy impaired assets stemming from the global financial crisis, it becomes apparent that there will be a heightened volume of NPLs that will need to be distilled from the banks in the coming years.
It is our view that securitisation can play an instrumental role in efficiently off-loading NPLs from the balance sheets of banks (which was not really an option following the GFC), and in this vein, we explore the feasibility of this in two recently published articles:
- The World Financial Review – “Time for securitisation to be a friend and not a foe of the NPL hit banks” – as available to view in full here (25 September 2020)
- World Finance – “Securitisation – the antidote for non-performing loans” available to view in full here (5 October 2020)
Ultimately, the sooner that securitisation technology is embraced, the better this will be for not only the banks but also the economies in which they serve.