HSBC Holdings plc (LON:HSBA) (NYSE:HBC), Deutsche Bank AG (ETR:DBK) (FRA:DBK) (NYSE:DB) and other European banks are expected to sell more of their loans, possibly up to $78 billion worth of noncore loans. Accounting firm PricewaterhouseCoopers said that’s a 33 percent increase over last year.
Banks in Europe are trying to cut costs and reduce their balance sheets because of new stricter regulatory laws. Also the continent’s financial problems have dragged on, which has resulted in many banks having less profitability and balance sheets with too much capital.
Canyon Capital Has Tapped Into The Pandemic Fallout: In-Depth Analysis [Q4 Letter]
Canyon Balanced Funds was up more than 41% net since the end of last year's first quarter. It took about 10 months for the fund to recover from the lows in that quarter, a few months longer than the 2009 rebound after the Global Financial Crisis. The fund has a little over $26 million in Read More
Royal Bank of Scotland has already sold a number of real estate loans to The Blackstone Group L.P. (NYSE:BX). Also Lloyds Banking Group PLC (NYSE:LYG) sold some of its property loans in Ireland for only 10 percent of their value. Currently HSBC Holdings plc (LON:HSBA) (NYSE:HBC) is reportedly thinking about selling $6 billion in personal and real estate loans in the U.S.
PricewaterhouseCoopers said it expects banks in Europe to target real estate and corporate loans in the next round of asset sales. Meanwhile the banks are demanding high prices for these assets even though there are so many loans for sale. As a result many European banks are having problems unloading their loans as private equity firms see them as overvalued.
Last month Avenue Capital Group co-founder and CEO Marc Lasry spoke at Bloomberg Hedge Fund Summit 2012, and he said one of the few ways to make money right now is to take on more leverage, like buying bank loans. He said it helps the banks de-leverage while also enabling the purchasing party to make money. Other hedge fund managers have also noted the opportunities as banks are forced to shed assets.