Global Debt Sales survey 2012 - Vastgoedjournaal

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A GLOBAL PERSPECTIVEclosing experience to draw upon. Given the scale of the macroeconomicreal estate declines across the country, this has made transactionsextremely challenging without a very motivated and informed vendor.While a number of transactions have been seen in the market, those thathave closed have largely been as a result of foreign banks seeking to exitthe Irish market, such as Lloyds’s loan portfolio sales to two US investors,and a major US bank’s mortgage business sale to Pepper Home Loans,both in late 2011/2012. It is also worth remembering that the majority ofdisposals within Ireland thus far, have focused on both performing andnon-performing loans. Given the buyer community for these assets todate, little sign of strategic or long-term financial interest in Irish assetshas yet to emerge.The UK is a bifurcated market – we see a very competitive andincreasingly heated consumer NPL market where new overseas entrantsare competing with established private equity owned players (such asLowell, Arrow Global, Cabot Financial, etc.), with the result that pricingand dealflow are increasing. The key question will be whether thisbuyer audience and the existing debt sale practices of UK banks will besufficient to handle the quantum of consumer NPLs residing on bankbalance sheets. Beyond this we have the issue of non-core, particularlyCRE, Leveraged Buyout (LBO) and residential mortgage, assets residingon both local and foreign bank balance sheets. While a challengefor banks headquartered from London to Dublin to Johannesburg toMelbourne, the desire and the commercial rationale to dispose ofthese assets in the UK has thus far been limited, with one importantexception. Lloyds has actively sought to unwind non-core legacy loanbooks in the UK spanning unsecured NPLs, CRE and leveraged loans toprimarily private equity buyers. As other banks — notably IBRC (formerlyAnglo Irish Bank) — seek to follow, the question remains whether thisheralds the start of the great UK bank asset sell off that many have beenpredicting for 3 years.Finally, it is worth noting that despite its historical activity and centralrole in the 2008 credit crisis, German banks are currently under littlepressure to sell assets, despite ratings downgrades, because of theoverall strength of the economy and sovereign. There have beensome substantial transactions in the housing market, but few cases ofGerman banks selling German assets. Further, with a few exceptions,we do not expect a great deal of activity from foreign-owned banksdisposing of German assets to increase going forward.US$40bnThe sum Ireland’s ‘bad bank’Nama paid in 2009 for US$92billion of real-estate loans26 GLOBAL DEBT SALES SURVEY © 2012 2012 KPMG International Cooperative (“KPMG International”), a Swiss entity.
A GLOBAL PERSPECTIVEASIA PACIFIC Frank JanikPartner, Portfolio Solutions Group, KPMG in ThailandBroadly speaking, the market for debt sales in Asia-Pacific canbe divided into two camps: the developed and the developingeconomies. Asia’s financial crisis precedes that of the west by adecade, so in terms of sales of loan portfolios the market has been activefor some time now and is to an extent mature. Central banks becamecognizant of the fact that non-performing loans on the balance sheets oftheir banks were increasing and brought in regulations to force banks toclean up their act. Regulations were passed in Taiwan, the Philippines,Thailand, Malaysia, and India to make asset sales more attractive and nowthere are a number of banks in the region that see debt sales as a wayof managing their problem loans. Korea has been an active market in thelast year and we have seen a number of unsecured credit card portfolioscoming out. However, it is a very domestic market and you need a localpresence or partner.Asia’s banks are relatively healthy and we are now seeing a reversal ofthe historic trend, with a lot of Asian money flowing into Europe and theUS. Asian money is targeting property and infrastructure assets to gain afoothold in new markets. Sovereign wealth funds have put aside billionsof dollars to invest in Europe, where they are focused on performingassets, particularly in strategically important sectors such as energy andfood production.Australia and Japan sit as standalone markets in the region and thepattern of asset sales is more comparable with Europe or the US andit is these countries where European banks have the majority of theirexposure to the region. Foreign banks are trying to exit portfolios thatare largely performing, non-core assets. We also expect to seeincreased activity from Australia’s second tier banks, who expandedinto property-based, project-finance-based lending which they did notreally have the expertise to manage and so are sitting on someproblematic portfolios.“Asian money is flowing intoEurope and the US, targeting propertyand infrastructure assets to gain afoothold in new markets.”© 2012 KPMG International Cooperative (“KPMG International”), a Swiss GLOBAL entity. DEBT SALES SURVEY 2012 27
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