NEWS...
Operationally Speaking
"Debt Sales & Purchase not flavour of the month with German parliamentarians or the German media", "Lone Star Germany: Ravenous For Bad Debt", "Workout veteran Lone Star is thriving by buying up Germany's troubled loans"...
Headlines such as the ones above don't help German debt buyers and sellers to establish a positive image.
According to German press reports German banks offloaded bad loans with a face value estimated at $13 billion to $16 billion last year, and Lone Star was by far the biggest buyer, accounting for as much as two-thirds of the market.
In one eye-popping deal last September, Lone Star acquired troubled loans with a face value of $4.8 billion from Hypo Real Estate Group, a spinoff of HVB Group.
While Lone Star does not release financial information, it's obvious that with 200 employees, including sister company Hudson Advisors LLC, it has made Germany a major focus of operations.
Karsten von Köller, 65, a veteran German banker who postponed retirement to become chairman of Lone Star Germany last year, says the firm is hungry for more deals.
"Our appetite is not yet sated," he said. Headlines and articles like this, combined with press and TV horror stories of ordinary Germans losing their homes and businesses because of their loans and mortgages having been sold to debt buyers has resulted in several debates in the German Bundestag, the lower house of parliament, on whether debt sale should be prohibited altogether, leading eventually to the passing of a law in June of this year to regulate debt sale and ensure future transparency.
Of particular concern was the sale of secured loans which had also caused most of the media horror stories and public concern. Relevant here for the UK of course, is what is of such monumental concern in one EU member state can easily lead to Europe-wide regulation imposed through the European parliament.
Whilst in the UK we don't currently suffer from such negative publicity, it is important for the industry to continue the good work currently undertaken by the CSA and DBSG, of presenting a positive PR and public image with enlightened and informative articles and messages. Further, this positive image must be supported by good business practices and transparency in transactions and underpinned by regular reviews of the voluntary code of practice established by the DBSG.
Note: For anyone wanting more information on debt sale and purchase in Germany there is now a debt buyers association in Germany which was formed in July 2007. Per their press statement, members employ around 4,000 persons in portfolio management and have around €12 billion of unsecured and €11 billion of secured loans under management.
by Kurt Obermaier
Executive Director, CSA and DBSG
Original article courtesy of DBSG. For further information visit www.dbsg-uk.com.
