The event focused on the development of the German and European NPL, credit, and real estate secondary markets. The discussions centered on the macroeconomic environment, the expected development of non-performing and at-risk loans, concrete market observations from the perspectives of banks, investors, and servicers, as well as technological and structural solutions for distressed and workout situations. The following summary focuses on the substantive contributions of the day and excludes organisational remarks.
1. Opening and Thematic Framing
At the outset, the conference was framed as a response to the significantly changed market environment in the German NPL and credit secondary market. The organisers emphasised that, after years of relative stability, Germany is once again moving into the focus of international investors, servicers, and credit market participants. Key drivers include regulatory requirements, a changed interest-rate environment, pressure on commercial real estate financing, and the question of how banks, investors, and credit servicers should prepare for a potential new wave of troubled loans.
2. Keynote by Prof. Dr. Christoph Schalast: Market Cycles, Crisis Comparison and Outlook for the NPL Market
The keynote placed current developments in the NPL market into a broader historical and macroeconomic context. The starting point was the argument that today’s situation can be compared with earlier crises, but is not simply a repetition of the 2007/2008 financial crisis. The presentation traced developments from the global financial crisis through the euro crisis to the Covid period and highlighted that banks, regulation, and market structures have fundamentally changed since then. Banks are now better capitalised, more heavily regulated, and more resilient than in earlier crisis phases.
The speaker placed particular emphasis on the difference between actual NPL ratios and so-called Stage 2 exposures. While official NPL ratios remain comparatively low, Stage 2 loans already indicate materially increasing risk. In his view, the real market dynamic currently lies less in loans that have already defaulted and more in a broad deterioration of risk profiles across bank balance sheets. This development should be seen as an early indicator of future market movement and suggests that the German market is approaching a phase of rising restructurings and transactions.
The main causes of current stress were identified as the interest-rate turnaround, geopolitical uncertainty, inflationary pressure, weak economic growth in Germany, and structural changes in business models. The keynote particularly stressed that many companies are now under pressure not only cyclically, but also structurally. In this respect, the current situation was compared more closely with the early 2000s, when Germany was described as the “sick man of Europe” and an extensive NPL wave emerged. The central message was that the market is entering a prolonged adjustment process and that banks and investors should prepare early for credit transfers, restructurings, and new market mechanisms.
3. Panel Discussion: Market Observations from the Perspectives of Banks, Investors and Servicers
The subsequent panel discussion brought together different market perspectives. Representatives from banks, investors, servicers, and advisory firms discussed which segments are likely to generate the next wave of troubled loans, how strong the current pressure really is, and which solution approaches appear realistic. There was broad agreement that the current environment should not be equated with the global financial crisis. Banks are now much more robust, with better processes, higher capitalisation, and greater workout experience. At the same time, it was made clear that this does not remove the structural pressure affecting stressed asset classes.
The discussion focused in particular on three areas. First, commercial real estate was identified as the most visible current problem area. Office properties, development projects, and peripheral locations are under pressure because financing costs have increased, exit markets have weakened, and structural demand risks are rising – including those related to remote working and possible productivity effects of AI. Second, SME financing and selected corporate segments were described as growing areas of risk, including automotive suppliers, energy-intensive industries, parts of the software sector, and certain online or healthcare business models. Third, fibre infrastructure was highlighted as a distinct distressed theme: high investment costs, fragmented markets, difficult consolidation, and in some cases overly optimistic investor assumptions have increased pressure in that segment.
Several panellists emphasised that the coming market phase is unlikely to emerge through large, homogeneous NPL portfolios. Instead, it is expected to materialise through smaller portfolios, single-name situations, bilateral transactions, and structured workouts. From the investor perspective, selectivity and local market knowledge were described as crucial. From the banking side, it became clear that Stage 2 loans are being monitored closely and are to be stabilised through restructuring measures before they turn into formal defaults. Overall, the panel portrayed a market that is clearly under strain, but that is dealing with risk in a more differentiated and professional way than in previous crises.
4. Specialist Presentation by Thomas Spulak: Restructuring of Commercial Real Estate Loans
The specialist presentation on restructuring commercial real estate financing highlighted that the market is suffering not only from higher interest rates, but above all from a fundamental refinancing gap. Loans that were structured in the low-interest-rate era under very different assumptions are now facing significantly higher financing costs, lower values, and weaker exit markets. The speaker argued that many “extend and pretend” strategies pursued over the last two to three years are reaching their limits. In many cases, the assumption that the market will normalise on its own in the near term is no longer sustainable.
As a key consequence, the presentation argued for shifting the focus away from merely buying time and toward operational value creation. The decisive question is who is actually capable of actively managing a stressed asset – including leasing, tenant management, CapEx decisions, positioning, and exit preparation. The presentation therefore distinguished between hold strategies, sales, shared value creation, and structured rescue solutions. In the speaker’s view, the central distinction is no longer whether a loan is formally problematic, but whether the operational management of the underlying asset can be organised in a way that restores exitability. In particular, the presentation stressed the importance of fast decision-making, data-driven management, and realistic sale triggers instead of repeatedly postponing difficult decisions.
5. Specialist Presentation by Artur Kozlowski: Development of the Secondary Market for Schuldscheine
The presentation on the Schuldschein market showed that this traditionally illiquid, buy-and-hold product has increasingly developed into a relevant secondary market segment in recent years. In particular, following several prominent distressed cases and growing pressure on certain sectors, the willingness to actively trade Schuldschein positions has increased. The main sellers were described as savings banks, cooperative banks, and in some cases foreign institutions that are seeking exit solutions either for risk reasons, because of concentration risks, or due to limited internal workout capacity.
The presentation emphasised that the Schuldschein secondary market becomes particularly relevant where smaller positions, opaque information, and divergent risk assessments come together. Platform-based processes can improve transparency, simplify market testing, and provide access to a broader investor base. Particular emphasis was placed on the role of standardised documentation, structured data rooms, and regulation-oriented process design. At the same time, it was made clear that price discovery, transferability of positions, and access to information remain key obstacles.
6. Specialist Presentation by Boris Hardi: Real Estate Transactions, Stage 2 Dynamics and Price Discovery
Boris Hardi’s presentation focused on the scale and market dynamics of commercial real estate loans. The key message was that real market pressure often becomes visible earlier than official NPL statistics suggest. The combination of rising refinancing costs, declining rents in some sub-markets, lower values, and tighter lending standards is creating a refinancing gap that will put many existing loans under pressure over the coming years. Particular emphasis was placed on the fact that a significant share of commercial real estate financing will need to be refinanced between 2025 and 2027, creating substantial adjustment pressure.
A central focus was the question of how sellers and market participants should approach price discovery. The speaker warned against imprecise and overly broad market approaches and stressed that unstructured sale processes often lead to inferior outcomes. Instead, targeted, well-prepared, and properly documented processes are required, with realistic price expectations developed at an early stage and suitable investors identified in advance. His key recommendation was to manage stressed exposures proactively and at an early stage, rather than waiting until the number of potential buyers has already narrowed significantly.
7. Specialist Presentation by Timur Peters: AI-Supported Due Diligence and Data Processing
The concluding technology segment demonstrated how artificial intelligence is changing the handling and transaction readiness of credit and distressed processes. The presentation introduced an AI-supported due diligence tool capable of analysing documents in multiple languages, structuring content, answering questions directly from the data room, and pointing users to the relevant source material. The aim is to reduce information asymmetries in credit transactions and significantly lower the effort required on both the buy-side and the sell-side.
It was particularly emphasised that, in many transaction processes, a large share of follow-up questions can already be answered from the data available. AI can help make this information accessible more quickly, involve more investors at an early stage, and reduce language barriers. At the same time, it was stressed that such systems do not replace legal or commercial responsibility, but rather serve as accelerators and structuring tools. Overall, technology was presented not as an end in itself, but as a lever for greater market transparency, faster due diligence, and more efficient secondary market processes.
8. Overall Conclusion of the Day
Across all contributions, a consistent picture emerged: the German credit and NPL market is at a turning point. The problems are different from those seen in previous crises, but they are significant in their structural depth. Commercial real estate financing, selected corporate segments, and specialised infrastructure themes such as fibre are particularly affected. At the same time, the market is more professional, more clearly regulated, and operationally far better prepared than in earlier waves. As a result, the coming years are likely to be shaped less by large-scale standard solutions and more by differentiated restructurings, targeted sales, active asset management, and data-driven processes. The event made clear that the most successful market participants will be those who identify risks early, assess them realistically, and make disciplined use of operational levers.
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