European banks are holding more than 1.3 trillion euros ($1.9 trillion) of loans they are trying to sell, a process that could take as long as a decade, a study by accounting firm PricewaterhouseCoopers LLP found.
“Corporate loan books that aggressively expanded over a short number of years will take the longest to unwind,” Richard Thompson, a partner at London-based PwC, said in today’s report. “High levels of government support in some markets have allowed the banks a more leisurely timescale for divesting their non- core and non-performing loans.”
German banks held about 225 billion euros of bad loans in 2010, up from 210 billion euros in 2009, PwC said. U.K. lenders had about 175 billion euros of such loans last year, compared with 155 billion euros the previous year.
The amount of non-performing loans across Europe increased by 15 percent, or 100 billion euros, in 2010, compared with the prior year, PwC said.
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