As predicted by PwC, European banks will need a period of at least another five years to sell their troubled assets, Reuters reported.
The banks are said to own a pool of €2.4tn of non-core loans, which equals to about 4% of the industry’s assets.
PwC says around half are non-performing loans, while the remaining portion belongs to performing loans that are not considered by banks as part of their core businesses.
The banks are said to be selling loan portfolios in a bid to expedite the process.
Banks in Italy hold about €186bn of non-performing loans and bad loans are a particular problem in the country.
In 2014, banks in this country disposed of €8bn of loan portfolios, which is anticipated to increase to over €15bn in 2015, as estimated by PwC.
Most of loan sales that took place in 2014 were from Britain, Ireland, Spain and German banks, which sold corporate loans, credit card portfolios and other unsecured retail loans, commercial property loans in addition to other specialized loan books, media sources said.
Earlier in 2014 PwC Cyprus banking industry leader Stelios Constantinou said: "Transaction activity is fuelled by the continuing need of many European banks to reduce the size of their balance sheet and restructure their operations.
"Bank restructuring will continue over at least the next five years – with activity likely to be fuelled by the findings of the Eurozone wide Asset Quality Reviews (AQRs) and stress tests currently underway."
Image: European banks have a pool of €2.4tn of non-core loans. Photo: courtesy of graur razvan ionut/ FreeDigitalPhotos.net
