March 14, 2019

Guest blog post: The trends shaping the future of European debt collection

Magnus Lilja

Director Sales and Clients, Lowell Sweden

The European landscape of the debt collection market is changing. The proportion of uncertain loans in Europe is higher now than before the financial crisis began in 2008. Read more about the underlying causes, how it affects consumers and the financial system as a whole, in this guest post by Magnus Lilja, Director Sales and Clients at Lowell Sweden.

Time for consolidations

Looking ahead we will likely see a further consolidation and specialization in the Credit Management Service (CMS) sector. At the end of March 2018, Lowell Group finalised its acquisition of the Intrum/Lindorff carve-out business in the Nordics. Thereby the second largest CMS player in Europe, focused on both the servicing and purchasing of defaulted debt, was created. In 2018 Intrum entered into a partnership with Intesa Sanpaolo SpA in Italy. The industry will likely see more partnerships and co-investment deals like these over time.

Too many NPLs?

Still, a decade after the Lehman-crash, there are large amounts of Non-Performing Loans (NPLs) on the banks’ balance sheets, most of them situated in southern Europe. The European Central Bank through its Single Security Mechanism (SSM) concludes, in its annual risk report, that NPLs are the second largest future risk for the European financial system after geopolitics. Despite record sales of NPLs, amounting to some 500bn EUR over the last couple of years, the NPL ratio is now higher than it was prior to the start of the financial crisis in 2008, now standing at approximately 800bn EUR. This is of course a concern going in to the next stage of the economic cycle.

EU legislation

In order to meet the challenges ahead the European Commission has presented a package aimed at creating greater transparency and accessibility of data, procedures for accelerated out of court collateral enforcement and stricter reserve requirements for loan loss coverage by implementing a prudential back stop. The latter will likely affect the EU already this year. This reform will incentivise banks to more quickly dispose of NPLs in order to grant new loans, driving the supply side of the NPL market further. 

The end customer, whether a corporate or a private individual, is now in focus for a successful outcome for all parties. Consumer insight and data are therefore instrumental to keep customer churn as low as possible, while securing an efficient handling and risk management to secure a creditor’s claim.

The increased element of digitization will contribute to a better accessibility where the end customer's experience is at the center. Lowell is also driving the development forward in these areas. The nascent journey of the Credit Management Service industry towards greater specialization and consolidation is taking a large step forward.


Magnus Lilja is Director Sales and Clients at Lowell Sweden. He has worked with banking and finance for the past 25 years within Swedish industry and financial advisory and banking.

Lowell and Tieto credit solutions have recently announced a new partnership This collaboration will bring about a new offering, and also new insights. Read more about Tieto & Lowell’s partnership

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