This is one of the main conclusions of the study “Investing in NPLs in Portugal: The time is now!”, presented by Prime Yield during the conference “NPL Europe”, in London. The report analyzes the actual moment of this market in the European context, providing an outline of the perspectives for the potential of transactions this year, and indicates the main challenges for the sector.

Nelson Rêgo, CEO of Prime Yield, says that «the settlement of the volume of credit default is bringing very important challenges to the European countries most affected by the crisis, as in the case of Portugal. An at a time when there’s an increasing pressure to reduce these credits in the Portuguese banking system, and when this type of portfolio is generating more and more interest among investors, it’s very important that Portugal places itself to raise the foreign capital, which has an eye on this sector», explains this expert.

In our country, with the current strong pipeline of potential deals and a stock of NPLs of around €41 million (19.5% of gross total of loans granted), it is expected that this activity experience an increment in the near future, as well as a growing interest of investors for this type of assets, considering the entities already investing in Portugal, and those that announced the intention to invest.

Besides, as Prime Yield refers, banking also announced more dynamic strategies to solve nonperforming loans. The growing competitiveness for the acquisition of real estate core assets may lead the more opportunistic investors to look at this segment, seen as an indirect way of real estate investment (through the acquisition of credit portfolios guaranteed in real estate assets), and the price may also be more attractive. On the other hand, it's expected that the Government develop an integrated solution to accelerate the settlement of this type of credits in the national banking system, which may also work in favor of this trend.

However, there are issues to overcome, such as the mismatch of expectations from buyers and sellers regarding the prices, refers the consultant: «there's a lot of interest from the investor for this market, which is happening all over Europe. In the specific case of Portugal, in addition to be necessary to solve tax and legal related issues, and we are expecting the government decision still this year, it is completely crucial to find a balance between the prices at which the banking is willing to sell its nonperforming credits, and those that the investors are willing to pay, and the latter call for a more realistic assessment of these portfolios», says Nelson Rêgo.

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