Working Groups

NPL Barometer / Working Group ‘NPL Market’

Predicting the future has never been easy – especially not when there is no reliable data regarding transaction volumes available as it is the case for the German NPL market. In order to gain an insight to the development of the market it is, however, possible to ask market participants for their opinion about it. For this reason, the BKS and the Frankfurt School of Finance & Management, one of the most renowned private universities in Germany, have initiated the “NPL Barometer”. Twice a year we ask bankers from Germany about their evaluation of the last six months and their estimation for the upcoming six months regarding stocks, prices and other properties related to the NPL market. We then merge the answers into a single number that stands for the current outlook on NPL trading. The NPL Barometer can be downloaded on our website.
There is also a BKS working group dedicated to the NPL market and its impact on the German and European banking system. This group has been involved in the design of the methodology of the NPL Barometer and gives feedback and accompanying insights to the results on a regular basis.

Working Group ‘Limiting the Law of Revocatory Actions’

In recent years, creditors have increasingly complained about disproportionate and incalculable risks resulting from revocatory actions in Germany. Going back to the Roman ‘Actio Pauliana’, revocatory actions under the German Insolvency Act provide a strong instrument for insolvency trustees to claim repayment of proceeds to a creditor who was aware of the parlous financial state of the debtor. However, supported by an extensive interpretation of the Federal Court of Justice, the practice of revocatory actions became more and more unpredictable for creditors, especially in situations of deferred payments. After a strong intervention of several interest groups and intensive discussions with members of parliament and the administration, in September 2015 the Government has issued a draft law to adjust the Insolvency Act and to improve legal certainty in the law of revocatory actions. On fall 2016 the draft law is expected to be adopted by the German Bundestag.

The BKS welcomes the proposed legislative changes that will contribute to a fair balance between creditors and insolvency administrators. We supported the process by articulating the legitimate interests of professional creditors and offering a specific proposal for modification – in particular an increase of the burden of proof for insolvency practitioners – that is also reflected in the draft law.

Working Group ‘VAT’

The legal situation in regards to the value-added tax handling of NPL transactions is quite ambiguous. This working group aims to help building a clear legal framework for VAT related questions.

With its NPL expertise the BKS plays an important part in this discourse and supports the process of improving the legal situation for NPL transactions.

Working Group ‘Modernizing the Compulsory Auctions Law’

This working group relates to a project that will have significant impact on the secured NPL-market in Germany. In February 2015, the Federal Ministry of Justice and Consumer Protection announced a research project into how the German Act on Compulsory Auctions and Compulsory Administration needs to be reformed. Originally drafted in 1897, the Act experienced only slight changes by now and still reflects the social and commercial realities of the 19th century. It is therefore a matter of major importance to the Ministry to adopt the law to the economic conditions of the 21st century:

“The objective is to create a body of regulations capable of dealing with the challenges that lie ahead, while also satisfying the current transparency requirements for legal transactions and helping to strike a fair balance between the interests of creditors and debtors.”

The reform project covers a wide range of topics and is therefore carefully prepared. Following an assignment of the Ministry of Justice, two extensive studies are carried out – on legal practice in Germany and on comparative law in selected EU member states. A decision on any legislative steps necessary in light of the findings is scheduled for March 2017.

The BKS welcomes the approach and supports the further process with the expertise of its members in servicing secured assets in Germany and throughout Europe.

Working Group ‘Data Protection’

Our latest contribution to the NPL discourse is our working group Data Protection covering everything related to privacy and data protection during NPL transactions.