2021 | Credit Portfolio Advisory

  • 50+ deals signed worth more than €45bn

  • Strengthened our Secured Funding & Securitisation Offering

  • 160+ professionals

As the world adapted to new COVID-19 variants and scenarios, the banking and credit markets regained resilience. Even now, risks stemming from the pandemic have not disappeared entirely. While the Eurozone is seeing increased activity and faces favourable financing conditions for 2022, some emerging markets show more exposure to market volatility.

While the Eurozone is seeing increased activity and faces favourable financing conditions for 2022, some emerging markets show more exposure to market volatility.

The Irish banking landscape experienced its most significant transformation in a decade, with two of the five traditional banks signalling their intention to exit the market, and then substantially withdrawing at the start of the year. As a response, the Non-Bank Lender space continued to mature while seeking to capitalize on the traditional banks’ exit at the same time as significant NPE portfolio transactions are still occurring.

Alantra played a significant role in the Greek credit market with close to €30bn transacted in 2021 as banks followed a spree of NPL securitisations utilising the Hercules scheme. The team advised all sell-
side mandates, and the winning bidder on the only mandate that was not sell-side. Banks are expected to continue NPL deleveraging in 2022, albeit at a slower pace, with NPLs anticipated to reach single digits by the end of this year.

In recent years, Portuguese banks have focused on preserving profitability and enhancing balance sheets, deleveraging their NPL books mainly through whole loan sales processes rather than more structured solutions such as NPE securitisations, notwithstanding a handful of such deals.

In the Netherlands, the three large Dutch banks have been pivoting their revenue strategies while continuing to focus on AML remediation. ESG remains a key theme for the Dutch banks both in investments and improved reporting for their balance sheets. We expect lenders and funders to increase focus on Equity Release Mortgage volume, a product recently endorsed by the coalition agreement of the new government.

This year, Italian banks should continue deleveraging NPEs from their balance sheets and start focusing proactively on alternative measures to cope with calendar provisioning. Recourse to structured finance techniques will continue to be a preferred route for disposal plans of loan exposures and – increasingly – repossessed and non-core real assets.

In the emerging Chinese credit market, NPL portfolio transaction volume broke the record for another year, reaching c. 1tn RMB according to unofficial statistics. However, international distressed investors were generally not successful when competing with local players, mainly due to higher return requirements and increased FX hedging costs.

Capital will continue to be a scarce resource, particularly due to the potential deterioration of loan portfolios following the COVID-19 pandemic. Synthetic securitisation will be an attractive alternative tool to raise capital in 2022, and alternative lenders will be active, particularly on the secured front, across core Europe and the UK.

Alantra’s CPA team emerged as one of the major players in European distressed credit securitisation last year, advising on very significant transactions such as the second-largest rated NPE securitisation in Europe, the merger of a non-bank financial institution and a FinTech bank; the first securitisation
of movable registered assets in Italy; the first rated NPL securitisation in Cyprus and the first Greek synthetic SRT securitisation, amongst others.

As we enter 2022 with largely positive momentum, bank deposits that rose significantly over the last two years across Europe will need to deploy this liquidity and seek higher yields, following historical lows in Central Bank rates. Acquiring NBFIs or FinTechs with strengths in the origination of higher-yield lending will continue to be an attractive strategy, one of which Alantra is uniquely placed to support.

CPA Highlighted Transactions