A brief introduction to the loan portfolio market today
The international loan portfolio market has seen significant
growth and continued innovation in recent years, as lenders bundle
up and offload risk from their balance sheets. Large scale
portfolio transactions are often key to stabilising the positions
of 'problem' lenders; as we write, details are emerging on
recently rescued Spanish lender Banco Popular's €30bn
non-performing loan portfolio.
Over the last three years, nearly a third of loan portfolios by
volume have involved those specifically backed by commercial or
residential real estate assets. For the vendors, the certainty of a
lump capital sum can trump potentially less secure future cash
flows, even where the magnitude of future cash flows has the
potential to exceed the "cash-in-hand" sum. Add in the
much enhanced regulatory and capital adequacy requirements, for
commercial real estate lending in particular, and the arguments for
trading out of a
