The sale of non-performing loans (NPLs) is becoming increasingly important to German banks in terms of the management and structuring of their massive non-performing loan portfolios. The market only began developing in 2003 and since then just a few initial transactions, either public or private, have been successfully closed. The market for NPLs available to potential investors is now estimated to be between € 300bn (£199.9bn) and € 400bn (£266.5bn).
Selling banks and potential investors in this market are likely to be confronted with various legal and tax issues, including data protection and banking secrecy. While these issues are not applicable to the sale of the loans, there are a number of legal obstacles that have to be observed over the course of the sale of distressed loan portfolios.
