Performing and Non-Performing Loans Across the World: A Practical Guide
Euromoney Trading Ltd, February 2009
This book contains country reports for specific jurisdictions and describes local law requirements which need to be considered when implementing performing and non-performing loan transactions.
Global loan markets and the subprime-crises have experienced significant demand-supply distortions, soaring price volatility, as well as drastic and unexpected flow constraints or surpluses, particularly due to the more frequent and deeper financial crises affecting different regions or markets. As understood from the public discussions, loan trades are the appropriate measure for the time being. This comprehensive, authoritative and multidisciplinary practitioner's manual is structured in a way that the principles of arranging, servicing, financing and exit strategies of such transactions will be dealt with. It contains country reports for specific jurisdictions and describes local law requirements which need to be considered when implementing performing and non-performing loan transactions.
Topics covered:
- Asset Management
- Outsourcing
- Portfolio Acquisition
- Risk Limitations Acts
Coverage includes the following:
- PL/NPL market overview
- Viewpoint of bank as vendor
- An investor's view
- Negotiated transaction vs. auction process
- Due diligence- Contractual framework of loan portfolio transactions
- PL/NPL transaction from real estate perspective
- Exit strategies
- Financing/securitization of a portfolio acquisition
- Distressed debt collateralized obligations from a legal perspective
- Country reports
- Sample forms
Introduction
PART 1 - PRINCIPLES AND SPECIAL TOPICS
1 Performing and non-performing loan market overview
Ana-Cristina Grohnert, René Hallenberger and Daniel Mair, Ernst & Young
Definition
History
Factors impacting the market
Market participants
Transaction structures
Market attributes
Sub-prime
Outlook
2 Viewpoint of a bank as a vendor
Andreas Roth and Christof Teichmann, Aareal Bank AG
Introduction
Motivation for portfolio sell down
Strategies for portfolio exit
Different characteristics of non-performing and performing loan transactions
Workflow of a non-performing loan portfolio transaction
Outlook
3 Information deliverables in distressed debt transactions: an investor's view
Martin P. Arnold, Lehman Brothers and Pierre Lussato,Galaxis Capital
Introduction
Information categories and relevance
Case examples
Conclusion
4 Selling sub- and non-performing loans: the negotiated transaction versus the auction process
Kingsley Greenland II and Gifford S. West, DebtX
Introduction
Defining the loan sale market
The negotiated transaction process
The auction process
Negotiated transactions versus auctions
The bottom line
5 Interaction between underwriting, workout and asset management in relation to a nonperforming loan portfolio
Marcel Köchling, Lone Star Germany GmbH
Introduction
Responsibilities of underwriting, loan workout and real estate asset management
Interaction of the three company divisions
Summary and outlook
6 Due diligence on non-performing loan portfolios from a bank's and an investor's perspective
Marco H. Wiedenhofer, KPMG
Introduction
Types of transaction (negotiated deal versus auction)
7 Contractual framework of a loan portfolio transaction
Simon Gottlieb Grieser and Jörg Wulfken, Mayer Brown
Sale and purchase agreement
Servicing agreements
Securitisation of non-performing loan transactions
Conclusion
8 Outsourcing versus sale considerations for outsourcing of servicing for a loan portfolio
Jörg Keibel, Hoist AG
Initial situation
European view
Outsourcing § 25a KWG
Pros and cons of servicing a loan portfolio in-house and externally
In-house servicing versus sale
Conclusions
9 Portfolio and performance management of German non-performing loan transactions
Andreas Wesner, The Carlyle Group
Introduction
Servicer functions
Portfolio management
The business plan
Measuring performance
Managing performance
10 Performing and non-performing loan transactions from a real estate valuation perspective
Katja Schmidt, KPMG
Introduction
The role of properties in loan transactions
Property-specific areas of action for the transfer of loans
Dealing with the special challenges associated with valuing real estate portfolios
Drive-by valuations as a key element of valuing real estate portfolios
11 Non-performing loans (especially corporate restructuring): status and exit strategies
Heike Munro, Deutsche Bank AG, London
Non-performing loan market: background, status and outlook
Players
Investments
Exit strategies
Exit issues and potential solutions
Summary
12 Financing and securitisation of a portfolio acquisition
Dr. Evamaria Wagner and Franck Thevenon-Rousseau, Calyon
Preface
Introduction
Portfolio sales and securitisation: two apparently competing financing techniques for sellers
How securitisation has been used as a full-fledged financing technique in portfolio acquisitions
Important considerations when combining portfolio acquisitions and securitisation
An overview of the European portfolio acquisition-securitisation market
13 Distressed debt collateralised obligations from a legal perspective
J. Paul Forrester, Mayer Brown
Introduction
Core concept of CDOs
CDO characterisation
CDO structure
Recent transactions
Required structure changes
Recent examples
Outlook
PART 2 -- COUNTRY REPORTS
14 Austria
Ingo Braun, Baier Böhm
Transaction structures
Banking secrecy and data protection
Antitrust issues
Tax and balance sheet treatment
Regulatory issues
Legal aspects and framework of the sale
Legal aspects of servicing
15 China (mainland)
John M. Marsden and Leonie Mong, Mayer Brown JSM
Introduction
Transaction structures
Banking secrecy and data protection
Antitrust issues
Tax treatment
Regulatory issues
Legal aspects and framework of the sale
Legal aspects of servicing
16 France
Jean-Pierre Lee, Mayer Brown LLP
Diversity of structures to transfer a portfolio of receivables
Banking secrecy and the protection of personal data
Specific banking regulations
Securitisation and transfer of receivables
Securitisation and servicing issues
17 Germany
Simon Gottlieb Grieser, Heiko Penndorf and Jörg Wulfken, Mayer Brown
Transaction structures
Banking secrecy and data protection
Antitrust issues
Tax and balance sheet treatment
Regulatory issues
Legal aspects and framework of the sale
Legal aspects of servicing
Recent developments
18 Germany: new regulations for loan sales in the Risk Limitation Act
Marcel Köchling, Lone Star Germany GmbH
Genesis of the act
The regulations: an overview
A résumé of the new regulations
19 Hong Kong
John M. Marsden and Steven Miller, Mayer Brown JSM
Transaction structures
Banking secrecy and data protection issues
Antitrust issues
Taxation issues
Withholding tax
Regulatory issues
Framework of sale and registration requirements
Supervisory regulations for servicing and outsourcing
20 Italy
Mauro Baldissoni and Gianluca Cambareri,
Tonucci & Partners
Recent developments of NPLs market
The role of the servicer
Real estate owned companies
Securitisation of non-performing bank loans
A true sale securitisation structure
Whole-business securitisation
Receivables securitisations --- data protection
The new opportunities: covered bonds and synthetic securitisations
New measures adopted by the Italian government to contrast the current international crisis of the financial markets
21 Spain
Francisco J. Bauzá Moré and Daniel Alaminos Echarri,Ramón & Cajal
Introduction
Operational structures
Bank secrecy and protection of data
Issues related to practices that go against competition
Fiscal and accounting aspects of the operation
Legal aspects within the scope of the assignment
22 Thailand
Steven Miller and Maythawee Sarathai, Mayer Brown JSM
Transaction structures
Banking secrecy and data protection
Antitrust issues
Taxation issues
Regulatory issues
Legal aspects and framework of the sale
Legal aspects of servicing
Recent developments
23 The Netherlands
Karin Reuder and Jan Bart Schober, Loyens & Loeff NV
Transaction structures
Banking secrecy and data protection
Antitrust issues
Tax treatment
Regulatory issues
Legal aspects and framework of the sale
Legal aspects of servicing
Miscellaneous
Dutch stabilisation measures
24 United Kingdom
Miles Bake, Mayer Brown
Methods of transferring loans under English law
True sale requirements
Insolvency
Taxation
Regulation and servicing
Confidentiality and data protection
25 United States: before and after the call comes
Monique J. Mulcare, Mayer Brown
Part 1: Before the call --- perspectives on the market and non-performing loans
Perspectives on investment opportunities
Perspectives on recovery opportunities
Overall perspective on the market in 2008 and prospects for 2009
Part 2: After the call --- the transfer of loans, legal issues for sellers and buyers of distressed debt and claims
Last thoughts
Appendix 25.1: Trade checklist 0
26 Vietnam
Hoang Anh Nguyen, Mayer Brown JSM
Deal structure
Banking secrecy and data protection
Antitrust
Loan classification and non-performing loans
Tax and balance sheet treatment
Legal and regulatory issues
Legal aspects and framework of the sale
PART 3 -- SAMPLE FORMS BY MAYER BROWN, GERMANY
Sale and Purchase Agreement
Servicing Agreement
Term Sheet
Simon Gottlieb Grieser
Dr. Simon Gottlieb Grieser is an attorney-at-law (Rechtsanwalt) and partner with Mayer Brown LLP Frankfurt am Main, Germany. He focuses on non-performing loan and performing loan transactions where he advises sellers, investors and ?nanciers. He was involved in almost all major transactions of this kind in Germany and the ?rst non-performing loan transaction in Austria. Simon is a frequent speaker on seminars concerning banking and capital market topics and publishes regularly in this ?eld.
Jörg Wulfken
Dr. Jörg Wulfken is an attorney-at-law and managing partner of the German of?ces of Mayer Brown LLP and has extensive experience in representing arrangers, originators, issuers, lenders and borrowers in ?nance transactions, securitisation transactions, bond issues and bank lendings. In addition, Jörg has particular experience in the area of non-performing loan transactions, advising sellers, investors and ?nanciers and has been involved in almost all major transactions of this kind in Germany. Jörg is the author of various treatises and articles in ?nancial law and is a regular speaker at conferences.
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