Non-performing loan

Non-performing loans (including non-performing loans, problem loans, toxic loans or colloquially " Bad loans " ) are loans whose repayment is uncertain. Here under both impaired loans as guessed in default of payment loans are called in Germany.

Definition and delimitation

A German legal definition of the term does not exist. BaFin defines a loan since 2009 to be impaired when

  • This is in default or
  • Was impaired.

BaFin published until 2008 an approximate value for the stock of non-performing loans, which was determined from the portfolios of German banks on the basis of gross lending to customers with a single impairment. The data were taken from the disclosure reports to the respective annual accounts of credit institutions. The German concept of non-performing loans has been adjusted in the year 2009 international standards. Thus, the defaulted loans must be reported now additionally, for which no specific provision has been made ​​; they include in the new definition in addition to the already -adjusted loans to non-performing loans.

The International Monetary Fund defines a loan as non-performing when

  • There is a delinquency in interest or principal payments for at least 90 days
  • Or with a delay of less than 90 days, good reasons exist that would fear a non-payment.

A good reason would be, for example, the disclosure of insolvency proceedings over the assets of the debtor. In order for a loan can be referred to as non-performing, this need not be terminated by the lenders but at least be terminated. In contrast to a non-performing loan are still at least partially provided interest or principal payments on a loan sub-performing.

Legal requirements

The termination conditions for late payment of installment loans and real estate- loans are governed by § 498 or § 498, Section 1, Section 3 of the Civil Code. Regardless of the payment, the Bank shall have an extraordinary right of termination. Loans of credit institutions are extraordinarily without notice and in accordance with § 490 section 1 or section 3 BGB in conjunction with No. 26, para 2 GC - savings and No. 19, Section 3 Conditions banks cancellable if a significant deterioration in the financial circumstances of the borrower and / or the collateral has occurred or may occur, and a reasonable period to provide or increase of loan collateral has passed without success. Here the focus must on an existing call option, not an already-effective termination. In these a payment default by the borrower (still) has not occurred.

Of action of the credit institution

Non-performing loans are impaired as doubtful accounts of banks at the expense of their revenue or loss increasing. In order to avoid or minimize a loss on the loan commitment, the bank has in the treatment of non-performing loans following courses of action:

  • Loan restructuring
  • Loan Processing
  • Sale of non-performing loans
  • Securitization
  • Outsourcing to a bad bank

The market potential of non-performing loans in Germany

The market potential describes the (estimated ) volume on the stock of non-performing loans. The actual trading volume is significantly different from downward because the banks have only a small proportion of your non-performing loans actually sold regularly in the past. The extension of the concepts of non-performing loan since 2009 tends to lead to a higher valuation of non-performing loans. The figures since 2009 are thus limited to the historical volumes comparable. The market potential for non-performing loans since 2003 in Germany developed as follows:

Worldwide market potential non-performing loans

France in 2008, here is a volume of non-performing loans in the amount of about 50 billion euros was recorded. In 2009, he rose by about 60 % to about 80 billion euros. 2010, there were approximately 88 billion euros in 2010 and 2011, 87 billion euros.

This NPL volumes seem relatively moderate compared with Italy, Spain and the United Kingdom.

Italy

As in other European countries, the volume of non-performing loans rose in Italy since the 2008 crisis strong. In 2008 there were 40 billion euros, 60 billion in 2009 and 2010, 80 billion euros. In 2011, the volume was forecast to well over 100 billion euros.

Spain

NPL volume 2008, approximately 70 billion euros recorded a massive increase in non-performing loans. 2009, rose to about 100 billion euros, in 2010 to nearly 120 billion euros, in 2011 to about 130 billion euros. In the first quarter of 2012 the amount continued to grow to around 150 billion euros.

United Kingdom

During 2001 to 2006 was in the years the volume of NPL under 40 billion euros, has been observed since 2007, a significant increase. In 2007, the volume of NPLs stood at about 50 billion euros, rising in the years 2008 and 2009 to over 80 billion euros, or nearly 160 billion euros. In the years 2010 and 2011 were recorded with a volume of about 160 billion euros in approximately similar values ​​.

China

Because few Chinese banks are subject to European or U.S. stock exchange or legal disclosure obligations, published only a minority of data on credit losses. A thorough assessment is difficult thereby. The estimates range from 400 billion to 572 billion U.S. dollars.

USA

The market potential for 2012 is estimated at about 300 billion U.S. dollars.

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