Credit Trade ( English loan trading ) is in Banking of as part of proprietary trading -driven trading of individual bank loans or whole loan portfolio ( "packages") between banks or financial companies ( financial investors , special purpose entities , collection agencies ) and trading in credit risks as underlying for credit derivatives .
Credit receivables are generally intended to be held as part of a bank's banking book from the time the credit is granted until the loan is repaid (in the bank balance sheet: category “held to maturity”, “in the portfolio to maturity” ). Here, the credit institutions have the firm intention and ability to hold the loans in their portfolio until maturity. This is underpinned by the fact that loan claims are naturally not as fungible as claims securitized in bonds. However, a situation can arise for credit institutions in which higher fungibility of loans appears to be desirable. Namely, fungibility is the basic requirement for credit trading. Reasons for loan trading are in particular the increase in the borrower's credit risk (“nonperforming loans”), the restructuring of a bank's entire loan portfolio or generally relieving the bank balance sheet for the purpose of improving the core capital ratio .
Larger syndicated loans can often only be placed if they are largely fungible for the participating syndicate banks “due to the design of the assignment provisions. In those cases in which a positive placement forecast is only possible with free transferability, arrangers can not make an offer on a different basis from the outset ”. Although it is repeatedly doubted, the transferability of credit claims by credit institutions, including to non-banks, is not legally objectionable.
The transfer of credit is an internationally common means of credit risk control in credit institutions. In Germany alone, the volume of loans sold between 2002 and 2007 was € 40 billion. Assuming an estimated volume of credit trade in Germany of € 20 billion (2005), this amounts to just 0.6% of the total credit volume of credit institutions to non-banks, which in 2005 was € 3,085.2 billion. A general distinction must be made between so-called non- performing loans and performing loans .
Nonperforming Loans and Performing Loans
For non-performing loans ( NPLs ; see also Bad Debt ) is, for loans of credit institutions, where a significant deterioration in the financial circumstances of the borrower and / or the collateral has occurred or may occur and therefore an important cause for immediate termination of Paragraph 1 or Paragraph 3 BGB or No. 26 Paragraph 2 AGB-Sparkassen / No. 19 Para. 3 of the General Terms and Conditions for Banks exists and a reasonable period of time for the creation or strengthening of credit collateral has passed without success; The focus is on an existing termination option and not on termination that has already taken place. Likewise, those loans on which interest and / or repayment are no longer paid in accordance with the contract belong even more to the category of non- performing loans . Accordingly, performing loans are all loan receivables that are serviced by the borrower in accordance with the contract and for which there is no important reason for termination.
Substantive legal starting position
The starting point of the loan trade are the loans agreed in loan agreements between the bank and the borrower. The loan agreement contains rights and obligations for the contracting parties. In particular, the borrower is obliged to service the loan in accordance with the contract, while the lender has to release the loan collateral after the security purpose has been finalized.
The contract for the sale of one or more credit claims contains elements of a purchase contract and an assignment contract. The subject of the sale of a loan is the credit claim established in the credit agreement, which is recorded in the bank balance sheet. As a rule, claims can be transferred from the claim holder (assignor) to a new creditor, the assignee, in accordance with German Civil Code (BGB), without changing the claim rights. The borrower is entitled to all defenses that he had against the old creditor, including against the new creditor. Here go ancillary rights to demand, particularly accessory collateral, according to BGB to the assignee with over. This assignment is the fulfillment of the sales obligations entered into in the purchase contract. In return for the assigned claim, the assignee pays the assignor the agreed equivalent value, which at best can amount to 100% of the assigned claim. This payment also counts as a sales contract, since it is to be qualified as consideration for the transferred claim.
The legislature had originally opted for the general fungibility of claims. This evaluation results from the wording of German Commercial Code ( HGB ), which reinforces the assessment made in German Civil Code (BGB). BGB requires the transfer of ancillary rights in the event of an assignment, BGB permits and also requires the disclosure of the necessary information. Loans are therefore generally assignable, unless an assignment is explicitly excluded in the contract or by law.BGB, which only provides for the exclusion of the assignability of a claim in exceptional cases. The BGB is thus shaped by the guiding principle of the marketability of claims. This result is also supported by the regulation of (1) of the
Banking regulatory perspective
The commercial lending business of credit institutions is banking within the meaning of (1) No. 2 KWG . Under civil law, it cannot be derived from this purely regulatory norm that loans may only be granted by credit institutions or that individual borrowers or consumers would be particularly protected as a result. As the legal predecessor of the BAFin, BaKred issued a position on March 19, 1997 on the transfer of credit claims in the context of ABS transactions in its circular 4/97. According to this, the transfer of a credit claim is no longer to be backed with equity capital if this involves a risk transfer for the transferring credit institution, in particular a legally effective transfer of claims to a special purpose vehicle without recourse and the seller of the claims does not bear the risk of an underwriter . With this, BAFin had paved the way for the sale of credit receivables by credit institutions from a regulatory point of view.
Situation of the debtor
In general, the debtor is not involved in an assignment of claims, so that he should not be disadvantaged as a result. He can also assert his objections to the assignor against the assignee (BGB). The debtor is protected against silent assignments in that he may make exempting payments to the assignor ( BGB) or in the case of double assignment to the false creditor known to him ( BGB). The debtor can also rely on a notification ( BGB). However, only the debtor in good faith is protected ( (1) BGB, last clause).
For these reasons, the borrower was relatively poorly protected by the assignment of credit claims and could not defend himself if his credit was transferred from the original credit institution to another institution. The poor legal protection of the debtor in the event of an assignment was justified by the fact that the assignment means a transfer of rights that does not grant the assignee more - but also no fewer - rights than the previous assignor himself had. An exception to this was the assignment of loans secured by land charges, for which the assignment of the security purpose did not simply have to be observed by the assignee. As a rule, the borrower did not need to be asked for consent to the assignment, since the assignment of the credit does not involve any change in the credit claim. Credit agreements or general terms and conditions were designed accordingly liberally with regard to possible assignability, especially since the law of obligations of the German Civil Code (this regulates both sales contract, assignment and loan agreement) as a disposable right grants the contracting parties extensive contractual freedom in the case of assignment. The right of assignment provided for the borrower's involvement only in exceptional cases, namely in the rare cases of restricted exclusion of assignment (assignment is made dependent on compliance with the consent, notification and formal requirements expressed by the third party debtor ).
Obstacles to Assignment
Prohibition of assignment and limited exclusion of assignment
If credit agreements contain an express prohibition of assignment according to void due to a violation of a legal prohibition . Assignment prohibitions are expressly contained in the credit agreements, according to which the credit institution is prohibited from assigning credit claims and / or other claims from a credit agreement. Such a prohibition of assignment leads to the nullity of assignments made anyway ( BGB).(2nd alternative) BGB, an assignment of the credit claim made in accordance with BGB would be
If the assignment of credit claims is made dependent on the consent of the borrower or special notification or formal requirements in loan agreements, this restricted exclusion of assignment can be removed by fulfilling these requirements. The debtor may not “unreasonably” refuse his consent to the assignment if there is no (no longer) a legitimate interest in the prohibition of assignment or if the legitimate interests of the obligee in the assignment outweigh.
Banking secrecy and data protection
For a long time, banking secrecy and the Federal Data Protection Act were considered an obstacle to assignment of credit claims . The AGB-Sparkassen expressly provide in No. 9 / AGB-Banks in No. 11 (assignment, transfer) that they may assign loans to third parties for refinancing or risk purposes. No. 13 AGB-Sparkassen expressly exempts from banking secrecy in the event of assignment.
Judgments of the BGH
On February 27, 2007, the BGH ruled that banking secrecy was of a purely contractual nature, which did not result in a real ban on assignment. According to BDSG . According to this, the obligation to maintain professional secrets that are not based on statutory provisions remains unaffected by the provisions of the Federal Data Protection Act. This not only means that data protection and banking secrecy apply side by side, but also that data protection law has a protective function in relation to banking secrecy as professional secrecy. Even in the case of public-law savings banks, banking secrecy does not preclude assignment, since banking secrecy is not a secret protected by criminal law. The constitutional complaint against the judgment of the Federal Court of Justice of February 27, 2007 was not accepted by the Federal Constitutional Court due to a lack of prospect of success.BGB, the assignor is obliged to provide the assignee with the information necessary to assert the claim. A related violation of the duty of confidentiality could, however, only trigger a liability for damages under the law of obligations under (1) BGB in conjunction with (2) BGB, but does not affect the effectiveness of the transaction in rem of the assignment of claims. The relationship between data protection and banking secrecy is largely determined by (3) sentence 2
Against this background, credit institutions in Germany began - strengthened by the transfer-friendly case law - with a more intensive sale of credit receivables from 2002. The SolvV , which came into force in Germany in January 2007 , has regulatory obligations for credit institutions to avoid or even reduce increased credit risks reinforced. In order to meet the legal requirements, the reduction of higher credit risks can be achieved by strengthening loan collateral , credit default swaps or loan sales. From this perspective, the sale of credit is an alternative in the process of risk minimization at credit institutions.
Risk Limitation Act
Because of this generally unfavorable legal situation for borrowers, a risk limitation law was passed on June 27, 2008. In this article only the parts of the Risk Limitation Act that are relevant to the assignment are dealt with. When assigning credit claims, the contractual partners now have to observe numerous special features.
Loans to natural persons
According to real estate loan agreements, credit institutions are now obliged to inform the borrower, who must be a consumer , before the conclusion of the contract with a clear indication of the non-consent-free assignment ( (1a) sentence 3 BGB). If there is then an assignment, the borrower must be informed immediately ( (2) BGB), unless it is a silent assignment. The new creditor no longer acquires loans secured by land charges in good faith and without objection and must therefore have the existing security agreement in accordance with (1a) BGB countered. The land charge must only be terminated after a previous six-month notice period before it becomes due ( Paragraph 1 Clause 1 and 3 BGB), deviating contractual agreements are no longer possible ( Paragraph 2 Clause 2 BGB). According to Code of Civil Procedure (ZPO) , the debtor is entitled to compensation in the event of an inadmissible foreclosure by the new creditor.No. 10 BGB, clauses in credit agreements or general terms and conditions that allow a change of credit institution are ineffective, unless the new creditor is named or the borrower reserves the right to give himself special rights to terminate the credit agreement when changing the contractual partner to solve. In the case of
In accordance with syndicated loans , which assume the assignment of the credit claim as a rule, this assignment prohibition can make the syndication of such loans difficult or even impossible. It is often agreed in the loan agreement, especially in the case of syndicated loans, that a sale of the receivable is possible or intended. One then speaks of transferable loan facilities .(2) of the German Commercial Code (HGB), companies have the option of concluding loan agreements with their banks and agreeing on a ban on assignment. The newly created Paragraph 2 of the German Commercial Code (HGB) declares Paragraph 1 to be inapplicable if it is a claim from a loan agreement whose creditor is a credit institution. Thereafter, in the case of commercial loans, an assignment made by credit institutions despite the prohibition of assignment is no longer effective in rem. In the case of
The regulations of the Risk Limitation Act are largely indispensable and cannot therefore be changed by the contracting parties involved in individual contracts. If, for example, the new creditor enforces the affected residential property in spite of the contractual servicing of real estate loans, the debtor was already adequately protected from the new legal regulation. However, the new legal regulation through the Risk Limitation Act has contributed to further protection of the debtor. The property owner, which, after the transition of the loan receivable to a third party unauthorized execution of an enforceable certificate (according to, para. 1, no. 5 ZPO) is exposed, has now according to ZPO a strict compensation from those of the Enforcement operates. The borrower or the owner has already been able to defend himself against an unjustified enforcement measure with an enforcement action according to ZPO. Until a judgment has been issued, the enforcement debtor can also apply for a temporary suspension of enforcement.
The most important formal requirement for a transfer of credits is their assignability. So-called assignment clauses are contained in the loan agreements so that loans can be transferred to other lenders in the future, for example in the context of loan trading .
Before the assignment takes place, the type of loans and borrowers that are to be transferred are identified at credit institutions (non-performing or performing loans, consumer loans , real estate financing , corporate loans, etc.). Then the loan agreements concerned are checked for their assignability, taking into account the Risk Limitation Act. If the contractual and legal requirements are met in the case of an assignment, the question of who will acquire the credit claims arises.
In addition to the loan trade among banks, banking practice has developed two alternatives to the loan trade in particular. In the case of larger loan packages with several loans, the route of outsourcing or spinning off to a purpose-built special purpose vehicle is predominantly chosen ( (2) and (3 ) UmwG ). By way of (partial) universal succession, this special-purpose vehicle can then become the owner of the claim for the loan packages to be transferred. The shares of the newly founded companies are in turn sold to third parties who refinance themselves through asset-backed securities (ABS) on the capital market with the help of bonds that are backed by certain assets, namely credit claims . The Financial Market Stabilization Fund Act in the version dated July 23, 2009, which deals with “toxic loans” in the context of the financial market crisis, also assumes that these claims will be transferred to special purpose vehicles or federal or state resolution agencies.
Financial investors such as LoneStar or investment banks can also be considered as further trading partners . In the case of an investment bank, the package is usually only "parked". Often the sale to a special purpose vehicle is also carried out for securitization purposes .
Collection agencies are chosen as new creditors when it comes to the transfer of nonperforming loans. They specialize in collecting dubious claims in particular. Neither the special purpose vehicles nor the collection agencies are credit institutions, so that banking supervisory regulations do not apply here. With the Risk Limitation Act, however, protective effects under civil law were created, which credit institutions have to observe when assigning credit claims.
In the opinion of the Federal Government at the time, the Risk Limitation Act closed essential gaps in consumer protection when assigning loans. The current federal government is also considering restricting the group of addressees of the assignments by requiring approval if non-banks are intended as new creditors. "An assignment of the loan claim or the transfer of the credit relationship to a company without a banking license will therefore only be effective in future with the approval of the borrower". However, this privilege will not apply to non-performing loans in which borrowers do not meet their loan obligations in accordance with the contract; the new regulations are only intended to benefit borrowers who service their debts in accordance with the contract. This means that bad loans can still be sold to non-banks.
Transferable credit agreements ( english Transferable Loan Facilities ) there is in particular in the international credit transactions where the credit agreements usually a clause included by which a portability is expressly permitted. This is the transfer clause ( English Transfer Clause or English Assignment Clause ), which is part of the model loan agreements of the Loan Market Association (LMA). It enables the lender to transfer the credit by way of assignment ( English transfer or English assignment ) to a new creditor who takes on all rights and obligations instead of the old creditor. The assignment clause can be designed in such a way that the borrower must agree to an assignment. Through the assignment clause, the buyer of such a credit claim acquires direct rights and obligations towards the borrower from the credit agreement, while the seller is no longer involved after the transfer.
- Günther M. Bredow, Hans-Gert Vogel: Credit sales in practice. Cases of abuse and current reform approaches . (PDF; 982 kB) University, Frankfurt / M. 2008.
- Simon Gottlieb Grieser, Jörg Wulfken (Eds.): Performing and Non-Performing Loan Transactions Across the Word. A Practical Guide . Euromoney Verlag, London 2009, ISBN 978-1-84374-547-1 .
- IAS 39.9
- Edgar Löw (Ed.): Accounting for banks according to IFRS: Practice-oriented individual presentations . 2005, p. 479.
- Opinion of the Central Credit Committee on the Risk Limitation Act of January 18, 2008, p. 8.
- representative for many: Hans-Peter Schwintowski , Peter Schantz: Limits of the transferability of mortgage secured loan claims . In: NJW , 2008, 472 ff.
- Günther M. Bredow, Hans-Gert Vogel: Loan sales in practice - cases of abuse and current reform approaches . Working Paper Series 82 04/2008, April 2008, p. 2 f.
- Opinion of the Central Credit Committee on the Risk Limitation Act of January 18, 2008, p. 3.
- Financial Times Deutschland , January 7, 2008.
- Deutsche Bundesbank, Monthly Report April 2009 , statistics section p. 20.
- Günther M. Bredow, Hans-Gert Vogel: Loan sales in practice - cases of abuse and current reform approaches . Working Paper Series 82 04/2008, April 2008, p. 14.
- BeKred circular 4/97 ( Memento of the original dated January 30, 2012 in the Internet Archive ) Info: The archive link was inserted automatically and has not yet been checked. Please check the original and archive link according to the instructions and then remove this notice. (PDF)
- The assignee could be less tolerant or accommodating than the assignor, which is not taken into account in the law.
- the first alternative of BGB deals with certain claims, the assignment of which would lead to a change in content; this does not apply to credit claims.
- BGH, judgment March 11, 1997, Az. X ZR 146/94; NJW 1997, 3434.
- BGH, judgment of February 27, 2007 , Az. XI 195/05, full text.
- BGH, judgment of October 27, 2009 , Az.XI ZR 225/08, full text.
- BVerfG, decision of July 11, 2007 , Az. 1 BvR 1025/07, full text.
- Nobbe, in: ZIP , 2008, 97, p. 98 f.
- Coalition Federal Government ( page no longer available , search in web archives ) Info: The link was automatically marked as defective. Please check the link according to the instructions and then remove this notice. (PDF) 17th legislative period, p. 47.
- Wolfgang Grill / Ludwig Gramlich / Roland Eller, Gabler Bank Lexikon: Bank, Börse, Financing , 1995, p. 568