Serbia is expected to be an important market for non-performing loan (NPL) transactions in the coming years, the head of transactions at Prague-based debt recovery firm APS Holding SE, Jozef Martinak, told bne IntelliNews on September 6.
The NPL portfolio had been growing within the region for several years as a consequence of the global economic crisis, which heavily affected economies in transition. For banks operating in the Western Balkans, collecting NPLs is a very serious issue that increases risk and negatively affects their business results. NPLs in most countries in the region have been accumulating for about a decade, and banks are actively looking to clean their balance sheets. This situation has created opportunities for distressed debt specialists.
“Typically, you have a foreign investor interest in buying an NPL portfolio with a ticket size which starts above €10mn, but the top ones start looking for a deal somewhere about €50mn. Small ones are usually acquired by local players,” Martinak told told bne IntelliNews on the sidelines of the ninth Southeast Europe Private Equity and Mergers & Acquisitions Forum in Belgrade.
Romania, Slovenia and Croatia have attracted a lot of investors in NPL transactions, Martinak added. APS Holding is already present in Poland, the Czech Republic and Slovakia, and is expanding into Hungary, Romania, Bulgaria and Serbia. The firm recently bought about €81mn worth of NPLs from the Serbian branch of Erste Bank and is currently bidding for an NPL package from the local arm of Italian Intesa.
“You need to be focused on country until it starts bringing fruits - the NPL market happens in waves,” he said.
“For example, the Serbian market is a fragmented market, [with] relatively small banks which can’t sell very large portfolios. We believe Serbia will be the market within the next years,” he added. “On the other hand, in Croatia, we are actively bidding for portfolios and there is a lot to sell now. It is primarily secured corporate portfolios; there is also a retail part and mortgages.”
Serbian NPLs have declined recently but remain high by regional standards. The share of gross NPLs held by Serbian banks stood at 20.9% at the end of March, declining 0.7pp during the first quarter of the year, the National Bank of Serbia (NBS) announced in its latest quarterly banking sector report published on June 23.
“Selling off NPLs to funds is the best way to get rid of them and then get back to your core business - approving new credits. This is the fastest and the easiest, as well as the cheapest, way of getting rid of NPLs,” the head of the restructuring and collection department at Erste Bank in Serbia, Gojko Vrcelj, told bne IntelliNews.
Don Don, a regional bakery group founded in Slovenia but active throughout the Western Balkans, will open a new production facility in the eastern Serbian town of Zajecar in spring 2018, Ales ... more
Serbia’s central bank decided to cut the monetary policy interest rate by 25bps to 3.75% at its monetary policy board meeting on September 7. The policy rate has been held constant at 4% since July ... more
An investigation is ongoing after a Bentley car hit Serbian President Aleksandar Vucic's motorcade on September 2, Deputy Prime Minister and Minister of Interior Affairs Nebojsa Stefanovic told ... more