Non-performing loan

DGAP-News: Aareal Bank continues its de-risking programme with another marked reduction in Italian credit risk

Friday, July 31, 2020 - 3:02pm

Wiesbaden, 31 July 2020 - Notwithstanding the challenges the COVID-19 pandemic has posed to market conditions, Aareal Bank continues to successfully execute on its accelerated de-risking programme by further reducing Italian non-performing loans (NPL).

Key Points: 
  • Wiesbaden, 31 July 2020 - Notwithstanding the challenges the COVID-19 pandemic has posed to market conditions, Aareal Bank continues to successfully execute on its accelerated de-risking programme by further reducing Italian non-performing loans (NPL).
  • This transaction reduced the Bank's Italian NPL volume to less than 500 million, i.e.
  • As for its total NPL volume, Aareal Bank has brought it down to less than 1 billion, thus reducing it by almost half within one year.
  • In spite of this additional non-recurring burden on income, Aareal Bank Group expects to post a slightly positive result for the second quarter.

NPL Manager® and USRES Partner to Deliver Enhanced Default Services to Private Lenders

Wednesday, July 8, 2020 - 1:15pm

Through this alliance, NPL Manager now features core USRES product offerings including valuations, inspections, REO liquidation, and eviction management services within its platform.

Key Points: 
  • Through this alliance, NPL Manager now features core USRES product offerings including valuations, inspections, REO liquidation, and eviction management services within its platform.
  • Mike Zevitz, CEO of NPL Manager, said, In response to the current market shift, there is growing demand for component services within default by private lenders.
  • Through our partnership with USRES, the addition of these services to the NPL Manager platform provides our users an immediate tool within their workflow, minimizing disruption, and maximizing efficiency.
  • Founded in 2019, NPL Manager offers a wide range of products and services designed specifically for NPL loans and RPL loans.

COVID-19 and non-performing loans: lessons from past crises

Thursday, May 28, 2020 - 12:04am

By Anil Ari, Sophia Chen, and Lev Ratnovski[1] During crises, the number of loans that cannot be paid back increases.

Key Points: 
  • By Anil Ari, Sophia Chen, and Lev Ratnovski[1] During crises, the number of loans that cannot be paid back increases.
  • What are the lessons from past crises for non-performing loan resolution after COVID-19?
  • In this article we use a new database covering non-performing loans (NPLs) in 88 banking crises since 1990 to find out.
  • However, other factors could make NPL resolution more challenging: government debt is substantially higher, banks are less profitable, and corporate balance sheets are often weak.

A new dataset on the dynamics of non-performing loans during banking crises

    • This is likely to bring about high levels of non-performing loans (NPLs) i.e.
    • High NPL levels are a common feature of banking crises, and are often studied around such events.
    • Existing Laeven and Valencia (2013) data report peak NPL levels during crises, but more data are needed to understand how NPLs evolve and are resolved.
    • Our recent ECB working paper (Ari et al., 2020) bridges this gap by presenting a new dataset on yearly NPL evolution during 88 banking crises since 1990.
    • The dataset covers major regional and global crises the Nordic crisis, the Asian financial crisis, the global financial crisis and many standalone crises in developing, transition, and low-income economies.

Most banking crises lead to high NPL levels

    • They start at modest levels, rise rapidly around the start of the crisis, and peak some years afterwards, before stabilising and declining.
    • Looking at all crises, we see that NPL levels peak at about 20% of total loans on average, but the variance is large: in developing countries in particular, NPLs can exceed 50% of total loans.
    • Only less than a fifth of banking crises avoid high NPL levels which we define as NPLs exceeding 7% of total loans.
    • It is tempting to use pre-crisis NPL levels to anchor such forecasts.
    • Yet, pre-crisis NPL levels are not a good indicator of post-crisis NPL problems.

Timely NPL resolution is difficult, but essential for economic recovery

  • Countries can facilitate the resolution of high NPLs using a mix of policy measures such as:
    • Asset quality reviews, to identify loans that are non-performing and need restructuring;
    • Separating good and bad assets of banks (known as “good bank”-“bad bank” resolution). This makes the balance sheets of “good banks” more transparent, steadies their market access, and lets them focus on extending new loans. “Bad banks”, often structured as asset management companies, proceed to extracting value from bad assets;
    • Recapitalising “good banks”, to ensure their lending capacity.
    • More details on NPL resolution methods are provided in Balgova et al.
    • (2020), and in ECB Financial Stability Reviews: Grodzicki et al.
    • Despite the economic benefits of NPL reduction and the variety of methods available, the data paint a sobering picture of historic NPL resolution.
    • While some countries resolve NPLs rapidly, a third of countries are saddled with NPLs for over seven years after a crisis.
    • How many years did NPL resolution take?
    • In our paper, we use the local projections method to assess the link between NPL resolution and post-crisis output dynamics, while controlling for their co-dependence.
    • The results underscore that NPL resolution is critical for economic recovery.
    • Six years after the start of a banking crisis, output in countries that experience high NPL levels is 6.5 percentage points lower than in countries that dont.
    • Of the countries that have high NPL levels, output in those that do not resolve NPLs is more than 10 percentage points lower than in those that do (see Chart 3).
    • This means that not resolving high NPL levels reduced output growth by 1.5 percentage points per year at least for the next six years.

What explained slow NPL resolution in Europe after the 2008-2012 crisis?

    • NPL resolution is more protracted in similar circumstances, and in countries with high public debt and more sophisticated banking sectors.
    • Interestingly, these high-level indicators have good predictive power: the average (pseudo) adjusted R-squared across the specifications is 0.24.
    • It turns out that high NPL levels in Europe in the 2010s were hard to anticipate: the crisis was extraordinarily severe for advanced economies.
    • By contrast, protracted NPL resolution was in line with historical patterns: it is common for crises that follow a credit boom (see Chart 4).
    • Chart 4 Actual non-performing loans in Europe versus what could have been predicted

What can we infer for NPL resolution after COVID-19?

    • Our results highlight forces that can make NPL resolution after the COVID-19 events different from that after the 2008-2012 crisis.
    • Some forces are conducive to NPL resolution.
    • Other forces point to challenges in NPL resolution.
    • Moreover, if the economic recovery from the pandemic is slow and protracted, credit losses from corporate distress will rise and could overwhelm banks, further complicating NPL resolution.
    • Given the importance of NPL reduction for economic recovery and many countries historical difficulties in implementing effective NPL-related measures, designing effective NPL resolution policies for the post-COVID-19 world is a key forward-looking financial policy issue for Europe today.

References

Thorofare Capital Funds $23,800,000 Acquisition Loan for Beverly Hills Portfolio

Wednesday, March 25, 2020 - 10:00am

Thorofare Capital has funded a $23,800,000 acquisition loan for a Beverly Hills, CA portfolio.

Key Points: 
  • Thorofare Capital has funded a $23,800,000 acquisition loan for a Beverly Hills, CA portfolio.
  • The properties include 415 North Camden Drive, a 17,936-square-foot, two-story mixed-use building in the renowned Beverly Hills Golden Triangle, situated between Rodeo Drive and Bedford Drive.
  • Thorofare sees an uptick in distressed debt acquisitions on the horizon that will be capitalized through its opportunistic strategy which offers swift, structured and reliable non-performing loan (NPL) acquisition financing to those investors.
  • Thorofare Capital, Inc. ( www.thorofarecapital.com ) is a national, vertically integrated commercial real estate debt fund manager.

Luis de Guindos: Interview with ERT TV (Hellenic Broadcasting Corporation)

Tuesday, February 4, 2020 - 12:06am

INTERVIEWInterview with ERT TV (Hellenic Broadcasting Corporation)Interview with Luis de Guindos, Vice-President of the ECB, conducted by Rallou Alexopoulou on 3 February 2020 and broadcast (in part) on 3 February 2020However, Fitch upgraded Greeces credit rating to BB on 24 January and the outlook is positive.

Key Points: 


INTERVIEW

Interview with ERT TV (Hellenic Broadcasting Corporation)

    Interview with Luis de Guindos, Vice-President of the ECB, conducted by Rallou Alexopoulou on 3 February 2020 and broadcast (in part) on 3 February 2020

      • However, Fitch upgraded Greeces credit rating to BB on 24 January and the outlook is positive.
      • Do you think Greece could catch up and benefit from the APP if it becomes eligible in the course of this year or the next?
      • The evolution of the Greek economy is positive and I think this is what has been reflected in the upgrades by the rating agencies.
      • So, once Greek bonds reach investment grade, which I hope will be sooner rather than later, they will certainly be part of the APP.
      • The Greek government has already launched the Hercules plan in an effort to reduce the stock of NPLs, and more actions are planned.
      • When you look at the progress of the Greek economy, you realise that it is performing quite well.
      • I think this is because it has a more competitive economy and its fiscal situation is much better than it was two or three years ago.
      • I think the only problematic aspect of the Greek economy is the NPL ratio, which is very high as you know it is above 40%.
      • This makes it difficult for banks to provide credit to the economy, to lend to households and non-financial corporations.
      • So, we at the ECB are convinced that it is crucial that Greece further reduces its NPL ratio.
      • I hope that Greek banks will find the means and the instruments necessary in order to continue disposing of the NPLs.
      • We have quite a lot to learn so it would be a little imprudent for me to speculate on developments.

    Hawthorn Bancshares Reports 2019 Financial Results

    Thursday, January 30, 2020 - 9:51pm

    JEFFERSON CITY, Mo., Jan. 30, 2020 (GLOBE NEWSWIRE) -- Hawthorn Bancshares Inc. (NASDAQ: HWBK), today reported consolidated financial results for the Company for the year ended December 31, 2019.

    Key Points: 
    • JEFFERSON CITY, Mo., Jan. 30, 2020 (GLOBE NEWSWIRE) -- Hawthorn Bancshares Inc. (NASDAQ: HWBK), today reported consolidated financial results for the Company for the year ended December 31, 2019.
    • In addition, we improved our year-to-date net interest margin by 20 basis points to 3.51% in 2019.
    • The Companys level of non-performing loans was 0.43% of total loans at December 31, 2019 compared to 0.49% at December 31, 2018.
    • The allowance for loan losses at December 31, 2019 was $12.5 million, or 1.07% of outstanding loans, and 246.09% of non-performing loans.

    Changes in the Roles of Hoist Finance Executive Management Team

    Wednesday, December 18, 2019 - 9:23am

    STOCKHOLM, Dec. 18, 2019 /PRNewswire/ -- Hoist Finance is making changes in the roles of the Executive Management Team following the largest portfolio acquisition for the company ever, as communicated on16 December, 2019.

    Key Points: 
    • STOCKHOLM, Dec. 18, 2019 /PRNewswire/ -- Hoist Finance is making changes in the roles of the Executive Management Team following the largest portfolio acquisition for the company ever, as communicated on16 December, 2019.
    • The changes will strengthen Hoist Finance's strategy of growth and diversificationinto new asset classesand will also support the efficient debt resolution of this secured non-performing loans ("Secured NPLs") portfolio in France.
    • Fabien Klecha, currently CSOand member of theExecutive Management Team,willin addition to the role as Country Manager for France assume the responsibility for theCenterofExcellence for Secured NPLs in Hoist Finance.He willdevelopour business within Secured NPLs to support all marketsin the light of it becoming increasingly important as an asset class for Hoist Finance.
    • The composition of the Executive Management Team will not change due to the above changes.

    Freddie Mac Sells $369 Million in NPLs

    Wednesday, November 6, 2019 - 3:00pm

    MCLEAN, Va., Nov. 06, 2019 (GLOBE NEWSWIRE) -- Freddie Mac (OTCQB: FMCC) today announced it sold via auction 2,243 non-performing residential first lien loans (NPLs) from its mortgage-related investments portfolio.

    Key Points: 
    • MCLEAN, Va., Nov. 06, 2019 (GLOBE NEWSWIRE) -- Freddie Mac (OTCQB: FMCC) today announced it sold via auction 2,243 non-performing residential first lien loans (NPLs) from its mortgage-related investments portfolio.
    • The loans, with a balance of approximately $369 million, are currently serviced by Specialized Loan Servicing LLC.
    • The sale is part of Freddie Macs Standard Pool Offerings (SPO).
    • Freddie Mac, through its advisors, began marketing the transaction on October 8, 2019 to potential bidders, including non-profits and Minority, Women, Disabled, LGBT, Veteran or Service-Disabled Veteran-Owned Businesses (MWDOBs), neighborhood advocacy organizations and private investors active in the NPL market.

    Hoist Finance Successfully Completes the Inaugural EUR 225 Million Securitisation Transaction Backed by Italian NPLs

    Tuesday, August 20, 2019 - 10:14am

    STOCKHOLM, Aug. 20, 2019 /PRNewswire/ -- Hoist Finance has successfully completed the securitisation of a portfolio of Italian non-performing, unsecured loans (NPLs) with a gross book value of EUR 225m (the "Transaction") as announced on 29 July 2019.

    Key Points: 
    • STOCKHOLM, Aug. 20, 2019 /PRNewswire/ -- Hoist Finance has successfully completed the securitisation of a portfolio of Italian non-performing, unsecured loans (NPLs) with a gross book value of EUR 225m (the "Transaction") as announced on 29 July 2019.
    • The Transaction involves the issuance of two classes of notes issued by the securitisation company Pinzolo SPV S.r.l.
    • (an Italian Law 130 issuer) to finance the purchase of NPLs from the Hoist Finance group company Marte SPV S.r.l.
    • The Transaction reduces Hoist Finance risk-weighted exposures and thereby allows deployment of capital released through the Transaction in new investments.

    The Philippines Banking Market: 2019-2020 Outlook - ResearchAndMarkets.com

    Friday, May 24, 2019 - 8:50pm

    The "The Philippines Banking Market: 2019-2020 Outlook" report has been added to ResearchAndMarkets.com's offering.

    Key Points: 
    • The "The Philippines Banking Market: 2019-2020 Outlook" report has been added to ResearchAndMarkets.com's offering.
    • This report provides a complete and detailed analysis of the banking sector for the Philippines.
    • The Philippines banking sector remains in a nascent stage of development, and most Filipinos tend to engage in financial activities using less formal channels such as pawnshops.
    • Throughout this period of stellar growth, the quality of loans in the banking sector has increased with NPL ratios decreasing across most loan categories from 2013 to 2017.