The European Central Bank’s asset quality review could see a surge in bank loans being classified as non-performing, delegates at PropertyEU's Distressed and Opportunistic Investment Briefing have heard.
The European Central Bank’s asset quality review could see a surge in bank loans being classified as non-performing, delegates at PropertyEU's Distressed and Opportunistic Investment Briefing have heard.
Mathieu Roland-Billecart, a partner in the UK real estate finance team at Ernst & Young, told delegates: ‘We have been involved in the review for banks and for the regulators, and we think this has the potential of leading to many more loans being classified as non-performing.'
He said that while ‘it’s always dangerous to speculate on what the outcome might be,’ if banks haven’t marked assets properly, they may be forced to take some ‘big hits’.
‘A number of banks could come to the market raising capital. We could see good banks and bad banks split. Bad banks could be funded effectively by their government, as we’ve seen in Ireland, or portfolios could be put on the market. It has the potential of keeping the transaction market busy,’ he said.
The review sees the ECB probe €3.7 tln of assets at 128 eurozone banks, with particular attention paid to riskier loans. It is due to be completed by the end of 2014.
