Darko Jovanović and Marko Ketler, Partners at Karanović Nikolić, recently commented on the state of the regional NPL market in a bne Intellinews article, as they earmarked Croatia, Serbia, and Slovenia to be the backbone of the region in this regard. Their comments follow some of the recent developments on the market, as Romania – a country considered to be the leader in terms of market activity for NPL's – seems to have lost its potential, with no large-scale transaction anticipated in the near future.
The same article highlighted how the entire process was started a couple of years ago by international banks from Austria and Greece that started selling off their loans in South East Europe (SEE), the same way they did in other parts of Europe. However, over time, NPL ratios in SEE came to be significantly higher than the ratios in Central Eastern Europe (CEE) where these figures can now mostly be expressed in single digits. On the other hand, based on KPMG's recent data compilation, it's noticeable that NPL ratios in SEE (+ Hungary) are all in double digits, with Serbia leading the way at 22.78% in addition to showing tendency for further growth.
The article concludes that Slovenia can be labelled as successor to Romania, in terms of being the most interesting NPL market, especially considering the December 2013 bail-in and restructuring of their banking sector, as well as its legislation which is regarded as the most favourable in the region. Furthermore, Croatia has also been mentioned as a rising player on the market, thanks to hosting some of the biggest deals yet in the regional NPL sphere.