Clifford Chance

Non-Performing Loans: The Evolving Landscape

20 April 2022

This is a reprint of an article originally published on 16 March 2022 as part of our publication "Structured Debt in a New World", accessible here.

Sales of non performing loans (“NPLs”) hit a four-year low in 2020, largely as a result of ongoing sales being put on hold as Europe entered lockdown and uncertainty regarding the performance of corporate and consumer debt. However, in recent months sales have risen significantly fuelled largely by government guarantee schemes. The most active jurisdictions have been Italy and Greece, with Italian sales constituting in aggregate approximately EUR 38.9bn, almost 60% of total sales in Europe.

In this article we examine some recent regulatory and market developments relevant to European acquisitions and financings of NPL portfolios. In particular (i) changes to Regulation (EU) 2017/2402 (the EU Securitisation Regulation or “EUSR”) and to Regulation (EU) 2013/575 (the Capital Requirements Regulation or “CRR”) which aim to remove some regulatory obstacles to the securitisation of NPLs; and (ii) the European directive on credit servicers and credit purchasers, including the standardised NPL transaction data reporting templates it will implement.

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