Second Wave of German Distress Starts Next Year

FRANKFURT-Following a ‘first wave’ of non-performing loans in Germany, a second is about to break as loans mature in 2011-2015 and these could bring up to $19 billion in volume into the marketplace for workout, Ruprecht Hellauer, managing partner of the structuring specialist Lohnbach Investment Partners here.

Hellauer said NPL trading activity increased over the last months. “These are either NPLs from the last wave – or little test balloons where banks have put together a couple of loans to just try to see and understand where the market is right now,” he said. “Broadly the institutions selling poorly performing assets fall into two groups – foreign banks, those without any strategic interest to stay in Germany and most motivated to run down their loan book and retrench to the home market and after this the German banks.”