Competitive Position

European NPL Market

Sales of European loan portfolios decreased significantly in 2020, showing the least amount of activity since 20151 over the first three quarters. A combination of this lack of activity in legacy NPL sales and stress on consumers, as a result of the pandemic, has led to an increase in NPL stock and an increase in provisions for European banks. Whilst it will take time, as the pandemic endures, for us to get a clearer picture of the resulting landscape, it is expected that NPL ratios will increase to levels last seen after the global financial crisis (“GFC”).

As with the GFC, there will likely be a lag in terms of the time between a peak in NPL stock on balance sheets and a subsequent peak in NPL sales. However, whilst transactions peaked in 2013 post-GFC2, we would expect less of a lag this time around given that the European market as a whole is now more accustomed to asset disposals.

Ultimately, the pandemic will create a significant buying opportunity in the years ahead and we are likely to see a ramp up during 2021 as banks' focus switches from helping customers through the crisis, to managing their own balance sheets. We have already started to see a reduction in levels of provisioning from H1, where levels trebled year-on year across Europe3, to H2 of 2020 in key markets, which suggests that this process may have already begun4.

Italy continues to be Europe’s most active market5 and disposals bucked the trend seen elsewhere in 2020 with NPLs decreasing year-on-year as their banks accounted for close to two-thirds of closed deals by the end of Q3 2020. The Greek market also continued to be active in the year and the two markets combined accounted for the vast majority of closed and live deals heading towards the end of the year.

Beyond those two jurisdictions, transactions in other markets have been sparse for the majority of the year but have now begun to pick-up with 2021 looking like a busy year. In the UK much of the proposed sale activity was put on hold when the pandemic hit but we have started to see sales pick up in Q4 with several of the key retail banks coming to market. The UK’s transaction pipeline for 2021 looms large given that UK bank’s had accounted for some of the largest increases in NPLs across Europe by the end of H1 2020, up 8.8% year-on-year6. In France, the largest NPL sale since 2015 completed although it had been in the pipeline for over a year. France has had the largest NPL level of any European country since the beginning of 2020 and there could be pressure from the ECB for sales to be conducted in 20217, adding to an already busy pipeline.

The Spanish market became extremely busy in Q4, particularly with SME loan portfolios, and Hoist participated in five sale processes during the period. Whilst NPL levels at Spanish banks have been falling now for several years, there was an increase between Q1 and Q2 of 2020 as the impact of the pandemic became apparent, although levels were still below those of a year earlier. Finally, both the German and Polish markets were quiet in Q2 but came back to life ahead of other European markets in Q3 with Hoist participating in several deals in each jurisdiction. The forbearance ratio for both countries rose year-on-year to H1 2020 suggesting an increase in payment holidays across the board but the ratio of NPLs actually declined over the same period (although there was a marginal increase between Q1 and Q2)8

Looking more deeply at the asset class mix, real-estate backed transactions continue to dominate the market. This includes portfolios with a mix of secured and unsecured assets, with banks seeking to drive down their NPL ratios quickly via bloc sales rather than granular disposals. Unlikely-to-Pay (“UtP”) deals have continued to become more commonplace9 and make up an element of two of the top four deals in the market during the year. Deals in both the corporate and performing arenas have been less frequent during the year. The growing trend in the securitisation of assets has continued, accounting for over half of European transactions during the year and these have involved secured, unsecured and corporate claims.

Expanding into secured acquisitions within our existing markets is a key element of Hoist’s strategy since it will allow us to access much deeper pipelines whilst leveraging upon the people, infrastructure and relationships that we already have in these countries. Mixed portfolios are a particularly important part of this strategy, since they will often include unsecured assets for which Hoist Finance is highly competitive, but that historically we have not been able to acquire due to the barriers presented by the secured segments of the portfolios. By expanding our ability to acquire these new asset classes, we will also increase our ability to buy assets within Hoist Finance’s historic area of strength and expertise.

Our Competitive Position

Our strategy since 2018 has been to expand into new asset classes, ensuring we are able to support banks and financial institutions in various stages of the credit risk cycle. This allows us to better compete with peers in our industry who operate integrated servicing platforms in multiple countries. 

However, we remain focused on our existing, prioritised markets, expanding the platforms we have already established rather than engaging in extensive M&A activity. To learn more about our expansion into new asset classes, click here. 

Hoist Finance also operates under a banking model, having been a licensed credit institution since 1996. This provides us with a unique funding advantage, with our acquisitions funded primarily through the use of customer deposits from our HoistSpar platform in Sweden and Germany. However, beyond this funding advantage, we are yet to fully exploit the potential of our banking platformWe have in the year taken new initiatives to ensure we are able to derive full value for our banking platform. 

 Debt Purchase Market Landscape 

  • Large industry players with integrated servicing platforms in multiple countries
  • Have tended to grow expertise through M&A transactions
  • Competing at the larger end, but not seeking to compete directly with PE
Asset Specialists 
  • Smaller, more specialist companies targeting a specific asset class 
  • Typically tend to operate in one or a small number of jurisdictions 
  • Candidates for M&A, being absorbed by the “One Stop Shops” 
Banking Model 
  • Players who use banking model to fund their acquisitions 
  • Well placed to manage more complex assets (performing, corporate, UtP) 
  • May be a platform to develop into a true challenger bank 
  • Focus on servicing relationships, with fewer assets on balance sheet 
  • May complement servicing revenues with some portfolio acquisitions 
  • Look for strategic partnerships: selling banks, investors, securitisation etc. 
Private Equity 
  • (Very large) investors who typically target a smaller number of high value deals 
  • May acquire servicing platforms, but treat these more as parallel investments  
  • Typically more visible in SME, corporate and secured NPL markets  


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- Annual Report 2020 -
- Årsredovisning 2020 -