Selling out in Germany

在1881年在WISMAR的小型波罗的海港开设第一家干货商店后，Karstadtquelle在其银行的支持下稳步扩展，成为德国最大的百货商店和邮政订房。因此，当该公司去年遇到严重的问题时，由于翻滚销售额造成大规模的E16亿美元（19.8亿美元）的损失，转向其贷款人的帮助。在政治压力下，在高涨和上涨的失业时协助一个陷入困境的客户，该公司的16家银行由Bayerische Landesbank和ABN AMRO领导，于11月正式义务延长了一项新的E175亿短期信贷额度。

这笔交易似乎回到了德国战后经济奇迹的荣耀日，当银行与该国的领先公司一起致力于为德意志AG的增长而致电的手套。但是当几个喀斯塔达特奎尔的债权人开始争抢他们的承诺时，墨水几乎没有干燥新贷款。1月28日，Landesbank Baden-Württttemberg（LBBW）同意将其股票占据贷款份额，大约欧元兑换，欧元估计为92美分。在小时内，Dresdner Bank和HVB集团已同意分别向巴克莱首都和德意志银行的类似折扣销售其曝光率，价值综合咖啡馆。随后，三名LandesBanks销售其曝光，将贷款总额销售为约4.6亿。

The sale of KarstadtQuelle's loans reflects a sea change in German banking that is giving rise to a fast-growing market for distressed or underperforming debt. Years of economic stagnation caused the level of bad and doubtful loans to soar to E160 billion, or 6.4 percent of loans outstanding at German banks, in 2004, according to consulting firm Mercer Oliver Wyman. The pressure of those dubious loans, combined with the imminent introduction of international accounting standards and the Basel II capital adequacy regime -- both of which require loans to be marked to market -- are prompting lenders to cut their exposure, even if that means severing long-standing relationships.

This new hardheaded approach hasn't come a moment too soon. The weakened state of Germany's banks was underscored dramatically last month when HVB, the nation's second-largest lender, agreed to be acquired by Italian bank UniCredit for E19.2 billion. The deal drove home the need for German banks to boost profitability or risk becoming bit players in the consolidation of Europe's banking industry.

“作为银行家，如果我们想拥有国际意义，我们必须改变我们的方式，如果我们想拥有国际意义，”斯图加特的LBBW管理委员会成员Bernhard Walter说。他说，销售表现不佳的贷款对于他的银行健康至关重要，并将释放资本来制造新的贷款。

International investment banks, private equity funds and hedge funds, meanwhile, are rushing into the market, confident that Germany's distressed and underperforming debt will provide pickings as rich as that of Japan and South Korea in recent years. Lone Star Funds, the Dallas-based private equity firm, has been the biggest player to date, purchasing distressed and bad loans with a face value of more than E7 billion over the past two years. In May, Goldman Sachs agreed to acquire Frankfurt-based Delmora Bank, which holds E2.1 billion in sub- and nonperforming loans.

"Why shouldn't a bank sell a loan at a market price?" asks Karsten von Köller, chairman of Lone Star Deutschland, the Frankfurt-based subsidiary of the U.S. firm. "Debt is more easily traded. This is a natural development that happens over time."

The growing influence of foreign investors like Lone Star and Goldman Sachs has sparked a political backlash of sorts. Private equity funds aren't just buying distressed debt, after all -- they are also pursuing leveraged buyouts of ailing companies with the aim of restructuring them through asset sales and layoffs. Foreign investors are also throwing their weight around in other ways. Two hedge funds, London-based Children's Investment Fund and New Yorkbased Atticus Capital, effectively forced the resignation in May of Werner Seifert as chief executive of Deutsche Börse over his aborted bid for the London Stock Exchange.

These activities have created a sense among many Germans that the country is under siege from speculative financial interests, just as Americans worried about the spate of leveraged buyouts and Japanese real estate purchases in the U.S. in the 1980s and the Japanese complained about U.S. buyouts of their distressed loans and banks in the 1990s. Franz Müntefering, head of the ruling Social Democratic Party (SPD), notoriously gave voice to these worries recently when he attacked private equity firms as a "swarm of locusts" that were razing German companies and destroying jobs.

Such anticapitalist rhetoric is unlikely to affect policy, however. The SPD suffered a humiliating electoral defeat in May in its traditional industrial stronghold of North RhineWestphalia. That prompted Chancellor Gerhard Schröder to call for national elections in September, one year ahead of schedule, saying his government needed a fresh mandate to pursue economic reforms. Opinion polls suggest that the SPD's center-right opposition, the Christian Democratic Union and its Bavarian sister party, the Christian Socialist Union, will sweep to victory this fall. CDU leader Angela Merkel promises to deepen market-oriented reforms in Germany, and other party officials have opposed any regulation of hedge funds, something Schröder has favored. And interestingly, UniCredit's bid for HVB hasn't sparked any nationalist backlash within Germany.

这不仅仅是德国政客，这些政治家们遗忘了一些外国投资者的活动。许多储蓄和合作银行，依赖于与当地公司和消费者的关系，也对令人痛苦的债务中不断增长的市场批评。鉴于他们估计曾占德国苦恼债务的40％，他们对交易债务的厌恶是市场增长的最大障碍之一。

"These arrangers, these investment bankers, these Lone Stars, they take these loans and say, 'We'll graze these fields and leave when there's nothing left to eat,' and after six or seven years, they'll leave Germany," says Axel Kraft, a member of the management board at Kreissparkasse Köln, a savings bank in Cologne. "We have to live with our reputation."

尽管是Müntefering和克拉夫等银行家这样的政治家的意见，但遭受痛苦的债务市场似乎注定要增长，因为业务表现良好的贷款占优异贷款的庞大，并且银行的需要加强他们的回报，银行表示。

销售不好的和表现不佳的贷款mushroomed from virtually nothing two years ago to an estimated E12 billion in 2004 and are expected to swell to E20 billion in 2005 and 2006 before leveling off at E15 billion a year, according to a recent report by Mercer Oliver Wyman and Kroll Associates. That would make Germany the world's second-biggest market for distressed debt, behind Japan and just ahead of the U.S.

Until recently, the bulk of activity has been in real estate loans, reflecting the depressed state of Germany's property market after the binge of postunification development. The sale of KarstadtQuelle's debt represented a dramatic new opening, in two respects. The borrower was a blue-chip company, not an empty office park, and although KarstadtQuelle faces serious financial difficulties, it continues to service its debt. The willingness of banks to sell such exposures should fuel the growth of debt trading, bankers say.

另一个值得注意的事实是其销售lvement of four landesbanks -- Bayerische Landesbank, Landesbank Hessen-Thüringen Girozentrale, LBBW and WestLB. These state-owned institutions have traditionally viewed themselves as public utilities with a duty to serve the businesses and people in their states. Today's rapidly changing regulatory environment, including the removal of the landesbanks' state guarantees this month, means they must operate increasingly like commercial banks.

WestLB and NordLB last month announced a joint venture with Japan's Shinsei Bank and U.S. private equity firm J.C. Flowers & Co. to service E400 million of bad loans; they invited other savings banks and landesbanks to join in; so far none has.

"Public banks are still reluctant, but I expect them also to change with regard to the disappearance of the state guarantees. We are approaching banks we believe have an NPL of a particular size," says Lone Star's von Köller, referring to nonperforming loans.

Meanwhile, demand for German debt among foreign institutions continues to grow. More than a dozen U.S. and European hedge funds and private equity funds, including such names as Citadel Investment Group and Cargill Investor Services as well as Lone Star, are looking to buy distressed debt, attracted by potential returns of 20 percent or more. Investment banks including Citigroup, Credit Suisse First Boston, Deutsche Bank, Goldman Sachs and J.P. Morgan are involved as both principals and dealers.

The competition among buyers is already weighing on margins. "There is a sense of frustration among investors, especially latecomers, who face a seemingly cramped marketplace with few available investment opportunities and reduced spreads," says Finja Carolin Kütz, director of Mercer Oliver Wyman's operations in Germany.

"Clearly, we have a seller's market," says David Abrams, who heads CSFB's global distressed-debt unit. "The pricings have been aggressive. If you're looking to sell something, everything is lining up for you."

Fresh evidence of the strong demand for distressed German assets came in May when Deutsche Annington Immobilien, a subsidiary of Terra Firma Capital Partners, the vehicle of U.K. private equity investor Guy Hands, agreed to pay E7 billion for Viterra, the property arm of German utility E.ON. The deal consisted of E4 billion of equity in 150,000 apartments and E3 billion in debt. Analysts had expected Viterra to fetch between E5.5 billion and E6 billion, but competing bids from U.S. hedge funds Cerberus Capital Management and Fortress Investment Group drove up the price. E.ON will post a cool E2.4 billion gain on the sale.

Distressed-debt sales have been accelerating in recent months. Goldman Sachs spent an undisclosed amount to buy Delmora, which holds sub- and nonperforming loans from two failed banks, Delbrück & Co. and SchmidtBank. The acquisition strengthens Goldman's ability to pursue more deals by giving it a German banking license, which should allow the firm to refinance distressed debt more easily, as well as Delmora's 200-strong loan workout department.

HVB will begin selling off E15 billion in bad and underperforming loans later this year. The bank's January announcement of the planned sales, along with a decision to take a E2.5 billion write-off on the loans, facilitated the merger discussions with UniCredit by signaling that HVB was finally coming to grips with its bad-loan problems, bankers involved in the transaction say.

Wiesbaden-based Aareal Bank began off-loading its E2.8 billion debt portfolio last month by selling E690 million of loans, mostly on commercial real estate, to Lone Star.

The market for distressed debt took off two years ago after Dresdner Bank, a unit of Allianz, set up an institutional restructuring unit to work off a E35.5 billion mountain of bad loans, including E9.2 billion of German real estate and corporate loans. The bank sold its last major German asset, a E1.4 billion portfolio of corporate and real estate loans, to Lone Star and Merrill Lynch Investment Managers last month. The deal, terms of which weren't disclosed, will enable Dresdner to close its restructuring unit by the end of this year.

Dresdner也在寻求将表现表现贷款转化为股权和推动企业重组。Dresdner和三个其他银行的财团于5月份同意，换取德国风力涡轮机的德国风力涡轮机的诺德克斯偿还债务，股权股权为欧元兑换股份。

这些行动减少了超过三个季度的表现贷款的Dresdner股票，在第一季度结束时达到E86亿，并允许银行减少债券的资本金额，E24亿美元。

Lone Star's German headquarters, across the street from the Frankfurt Convention Center, is in a modern office building whose vacant lower floors are a reminder of the excesses that debt traders are trying to work off. Many of the loans in the firm's eight disclosed distressed-debt transactions involve real estate, mostly in Eastern Germany, a region von Köller fled as a child to escape the Communist regime.

The 65-year-old von Köller knows the market well. A veteran mortgage banker, he was named chairman of Eurohypo in 2002 when the firm was formed by the merger of the mortgage arms of Commerzbank, Deutsche Bank and Dresdner. After integrating the three businesses, von Köller retired from Eurohypo last year and was promptly recruited by Lone Star to head its German operation. He arranged the biggest loan purchase so far in Germany, teaming up with J.P. Morgan last year to buy E3.6 billion in loans -- of which E2.48 billion were nonperforming -- from Hypo Real Estate Bank.

"Germany is seen with different eyes from the outside," von Köller says, explaining the foreign interest in its distressed debt. "Both sides profit from that."

VonKöller说，通过购买折扣和比德国银行的锻炼更具侵略性的锻炼立场，唯一的旨在达到其投资的年度收益率为20％。该公司的贷款服务子公司Hudson Advisors，德国雇用了250人，其工资与他们在贷款上实现的回收速度相关联。

VonKöller正在谈判汉诺威Nordlb的e50万购买Mitteleuropäischehandelsbank。这笔交易很小，但它将提供孤立的银行许可证，允许公司更有效地改进苦恼的抵押贷款。

Deutsche Bank's 45-person distressed-debt team has acted as a principal alongside a group of hedge funds to buy up the debt of several companies, swap it for equity and then carry out restructurings. In one case, Deutsche and its partners bought 69 percent of a E75 million convertible bond of Augusta Technologie, a communications and information technology concern, that the company had defaulted on. The investors persuaded other bondholders to agree to a debt-equity swap and ended up owning 62 percent of the company. Deutsche aims to sell its stake, probably to a private equity firm, later this year.

"Our goal is to restructure a business out of court," says Joachim Koolmann, who heads Deutsche's distressed-debt unit. That's essential because German law requires an immediate liquidation of assets after a company goes bankrupt.

Despite the latest burst of activity, Kütz of Mercer Oliver Wyman warns that Germany's secondhand debt market could cool off unless the country's big nonprofit banking sector sheds its inhibitions and joins the trend. The country's deeply conservative savings banks and cooperative banks remain reluctant to sell loans, regarding that as tantamount to a betrayal of their long-standing clients. "We have a public contract," says Kreissparkasse Köln's Kraft. "We will not take away the umbrella when it's raining. That's not our duty."

众所周知的储蓄储蓄储蓄储蓄储蓄储蓄银行在德国北部的Görlitz赛中尼斯·普勒斯火花赛，在2004年第一季度出售了房地产贷款的e100万面贷款，以孤独的明星和J.P.摩根。

Notwithstanding the obstacles, the sheer size of Germany's underperforming loan pools and the regulatory pressure on banks to reduce their exposures should ensure a bright future for debt traders. "Over the next 18 months, we'll see some big portfolios, and the market will continue to open up," says Deutsche's Koolmann. "Once these large portfolios are done, there will be a more normalized business. There will always be stressed or distressed loans."