Non-Performing Loans In Central Europe

Throughout the CEE/SEE region, the percentage of non-performing loans (NPLs) to total loan receivables has increased dramatically during the current economic cycle.

In many areas, lenders appear to have reacted to this by pursuing a strategy occasionally called "extend and pretend." But in light of ever increasing regulatory (capital) pressures concerning flawed banking assets, we believe that many regulated lenders may be left with little choice other than more actively managing distressed borrowers/portfolios.

On the other hand, there is increased buy-side demand for distressed credits in a variety of industries and across asset classes, which in turn should allow current creditors to consider disposals of credit exposures (single names and portfolios) as part of the strategic management of distressed exposures.