“A SYSTEM WHERE banks are piling up non-performing loans has a very negative impact on the economy. If you look at NPL problems around the world it always takes the banks to clear their bad debt problems for valuations in the underlying assets to pick up. Banks will not extend credit on more assets in the same asset class. Take real estate: the minute banks sell to people like us, volumes can start to rebuild, and that’s great for the German economy.”
So argues Bruno Scherrer, partner and European head of Lonestar, a Texas-based private-equity firm that has played a pivotal role in stirring up the honey pot of German lending.
Scherrer explains that NPL values in Germany are so high – anywhere between €200 billion and €350 billion, depending on which analyst you believe – that the German economy can no longer sustain them. “Once...
