CEE market Series with focus on the NPE landscape – Romania
Romania has always been a CEE hotbet for non-performing loan transactions since the early 2010s. Through the past 5 years, approximately one third of the gross book value brought to market was originated from Romania. Historically, the driving forces behind one of the largest transactions in the CEE were the favorable regulatory regime, the well-established servicing platforms and the transparent nature of the deal processes.
Now, as the majority of the financial institutions have already de-leveraged themselves to a comfortable level of non-performing loans, the market has changed. On the sell-side, there is a strong regulatory push towards banks to prudently address early-staged distressed. Due to the burning need to comply with regulatory requirements we see a future supply of sub-performing assets from the banks.
On the one hand, from the buyers‘ perspective, the distressed debt market still offers above benchmark returns in today’s low-growth macroeconomic environment. On the other hand, there is scarcity of low-risk investment opportunities in Western countries. As a result, we anticipate that capital will flow towards the riskier but potentially profitable CEE countries, including Romania.
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Consultant, PwC Austria, FS Deals