Do NPL portfolio sales help reduce banks’ financing costs?

Florian Manz, Florian Kiesel and Dirk Schiereck

Economics Letters, 2019, vol. 182, issue C, 93-97

Abstract: We examine financing cost implications of non-performing loan (NPL) divestitures in the European banking industry. Based on a uniquely large transaction database covering 180 NPL sales, we analyze whether selling banks are able to reduce their financing costs measured by CDS spread changes. We do not find a significant tightening of CDS spreads around NPL divestitures, indicating that European banks are not able to reduce their financing costs by NPL portfolio sales.

Keywords: Non-performing loans; Banks; Credit default swaps; Restructuring; Bad management (search for similar items in EconPapers)
JEL-codes: G14 G18 G21 G32 (search for similar items in EconPapers)
Date: 2019
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:182:y:2019:i:c:p:93-97

DOI: 10.1016/j.econlet.2019.06.009

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