Non-performing loans are loans at risk of default, or loans where the borrower fails to meet the redemption schedule. The research by Fosse Financial’s team of analysts apparently also revealed that while Germany has the largest share of non- performing loans in Europe, Italian banks have the second largest with an estimated EUR100 billion in bad debts, as of the end of 2007.

A spokesperson for Fosse Financial apparently stated that Germany’s trade in non-performing loans has been suffering as a result of several factors, including the impact of the global credit crunch on non-performing loan portfolio prices and banks' hesitance to offer new portfolios on the market.

Fosse Financial’s research team apparently concluded that the main cause of a high level of bad debts in the portfolios of German Banks was the weak economy and rising number of insolvencies since the mid-1990s, as well as a simultaneous fall in the value of loan collateral.