GS to acquire €2bn German debt portfolio

Goldman Sachs has entered final-stage talks to acquire a €2bn portfolio of bad loans from German bank Delmora, beating off competition from Lone Star and Lehman Brothers.

German specialist bank Delmora has entered into final stage talks with global asset manager Goldman Sachs for the sale of its €2 billion ($2.6 billion) portfolio of non-performing loans (NPL), according to a report in The Financial Times.

Goldmans beat off competition from other interested distressed debt buyers including Fortress, Lehman Brothers and the biggest player in the fast-growing German market, US distressed specialist Lone Star.

According to the report, co-head of Delmora Paul Wieandt said: “Following the completion and assessment of the bidding process, further negotiations will take place with Goldman Sachs with the aim of concluding the deal.”

Delmora manages the €2 billion portfolio of NPLs on behalf of SchmidtBank and Delbrueck Bank, the group from which it was hived off last year.

Germany is reckoned to be the second largest NPL market in the world behind China. Market experts reckon the market may be worth around €300 billion, with €20 billion worth of loans expected to be traded this year.

Towards the end of 2004 Lone Star completed the two largest deals in the German NPL market in a month. In September the firm acquired a €3.6 billion portfolio of property-related debt from German mortgage company Hypo Real Estate.

In October, Lone Star acquired €1.2 billion worth of bad loans from Dresdner Bank. Dresdner Bank has been one of the most active sellers of NPLs in Germany, having reduced its portfolio of domestic bad loans from in excess of €9 billion to €4 billion in 2004.