REFIRE - Florian Glock
Gifford West
Ably chaired by Gifford West, head of international operations at leading web-based marketplace DebtX in Boston, the panel included NPL experts Ulrich Ahrens of Apollo Global Management, Thomas Wiegand of Cerberus Deutschland, Clarence Dixon of CBRE, Ruprecht Hellauer of Albulus Advisors Germany, and Jose Holgado of FMS Wertmanagement.
One of the livelier sessions at the recent Real Estate Capital Germany Forum 2015 held at the Kempinski Hotel outside Frankfurt last week, and attended by REFIRE, was a panel session entitled NPLs: A European Perspective.
Ably chaired by Gifford West, head of international operations at leading web-based marketplace DebtX in Boston, the panel included NPL experts Ulrich Ahrens of Apollo Global Management, Thomas Wiegand of Cerberus Deutschland, Clarence Dixon of CBRE, Ruprecht Hellauer of Albulus Advisors Germany, and Jose Holgado of FMS Wertmanagement.
Gifford West jokingly pointed out that, had we been in 2005, the session would have been the early-morning pace-setter for the entire event. In 2015, however, he suggested that the absence of the major long-threatened tsunami of German NPL sales meant that the NPL panel discussion was now deemed more suitable for the post afternoon-coffee slot, and just prior to cocktails.
Most panellists agreed that the tsunami was still well out of sight, apart from Commerzbank’s ongoing efforts to shift its own and its erstwhile Eurohypo subsidiary’s legacy loans off its books with the maximum haste. As for the other German banks, the ‘bad banks’ FMS and EAA with their low funding costs are pursuing “organic” resolutions, while the large private banks are handling things internally with their own workout teams, and the smaller Sparkassen are also grinding away with their internal teams ‘resolving’ problems gradually.
The participants agreed that nonetheless there was a steady stream of granular sales eating away at the mountain of NPLs, albeit often barely noticeable until you compare the heap a year later, and note how much it has gone down. Ruprecht Hellauer of Albulus in particular stressed the steady chipping-away nature of the business now, rather than big spectacular portfolios being suddenly released. Throughout Europe, large sales are still likely for non-core positions while banks adjust their strategies to either a national approach or a pan-European approach. German banks are, still, weighing up whether loan sales can help them close down undesirable positions, and will still sell off loans if it’s not worth the trouble of working them out. However, these are more likely now to be single asset or small pool sales.
These domestic sales are a function of operating costs versus balance sheet considerations, and the squeezing of German banks’ margins in operative lending in this new low interest rate environment is helping to keep a steady pressure on the need to reduce costs in working out NPLs, the panellists agreed.
West pushed the panel as to when the next German NPL crisis would rear its head, given the competitive nature of current German lending. The panel was divided, with some believing the lessons of the past had been learned. Most agreed, however, that if bulk German sales were to put their indelible stamp on the market as in previous years, that moment was still at least five years away.
