The primary market
The primary market is where banks sell portfolios of non-performing loans that they have originated themselves. While the average NPL-ratio among European banks have come down to 1.8% in 2025 (EU), from significantly higher levels (reached 7.5% during the euro-crisis in 2012), estimated sales volumes have increased every year since 2021.
Regulators have made holding NPLs on lending bank’s balance sheets increasingly costly, with the introduction of the NPL prudential backstop regulation in 2019. Regulators have also stated an attempt to increase the liquidity of the European NPL-market, through e.g. the introduction of a regulated status for Specialised Debt Restructurers in 2025.
Encouraging banks to sell their NPLs reflects regulators’ attempt to take down credit risks in the European banking- and financial system.
