Difference between revisions of "Secondary NPL Market"
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'''Secondary NPL Market''' is a [[Secondary Market]] for [[Non-Performing Loan | non-performing loans]] and other [[Credit Agreement | credit agreements]] that are not being fulfilled as has been contractually stipulated. | '''Secondary NPL Market''' is a [[Secondary Market]] for [[Non-Performing Loan | non-performing loans]] and other [[Credit Agreement | credit agreements]] that are not being fulfilled as has been contractually stipulated. | ||
| + | == Function == | ||
| + | In a secondary NPL market third parties (the first and second parties being the original borrower and lender) are able to buy non-performing obligations. | ||
| + | |||
| + | == Market Participants == | ||
| + | Due to the sensitive nature of credit agreements, participants are typically subject to authorisation and supervision similarly to other sub-domains of the financial / credit system | ||
| + | |||
| + | === Credit Sellers === | ||
| + | * Originating Banks | ||
| + | * Other Financial Institutions granting credit | ||
| + | * Other Business entities granting credit | ||
| + | * Investment Funds | ||
| + | |||
| + | === Credit Purchasers === | ||
| + | * Investment Funds | ||
| + | * Other financial institutions | ||
| + | |||
| + | == Issues and Challenges == | ||
| + | * Ensuring borrowers are not worse off following the transfer of their [[Credit Agreement]] | ||
| + | * Transferability of bank’s claims to non-banks | ||
| + | * Duty of care imposed on sellers and buyers of credit receivables<ref>[https://www.vandoorne.com/en/knowledge-sharing/More-on-transferability-and-assignability-of-banks-claims-to-non-banks-and-related-duties-of-care/ Dutch Case]</ref> | ||
| + | * [[Servicer Risk]] | ||
== See Also == | == See Also == | ||
* [[Transferable Contract]] | * [[Transferable Contract]] | ||
| + | |||
| + | == References == | ||
| + | <references/> | ||
[[Category:NPL]] | [[Category:NPL]] | ||
Latest revision as of 12:59, 9 June 2021
Contents
Definition
Secondary NPL Market is a Secondary Market for non-performing loans and other credit agreements that are not being fulfilled as has been contractually stipulated.
Function
In a secondary NPL market third parties (the first and second parties being the original borrower and lender) are able to buy non-performing obligations.
Market Participants
Due to the sensitive nature of credit agreements, participants are typically subject to authorisation and supervision similarly to other sub-domains of the financial / credit system
Credit Sellers
- Originating Banks
- Other Financial Institutions granting credit
- Other Business entities granting credit
- Investment Funds
Credit Purchasers
- Investment Funds
- Other financial institutions
Issues and Challenges
- Ensuring borrowers are not worse off following the transfer of their Credit Agreement
- Transferability of bank’s claims to non-banks
- Duty of care imposed on sellers and buyers of credit receivables[1]
- Servicer Risk
