Download NPL Panel presentation - Kamen

The role of EBRD in NPL Resolution and
Restructuring
Kamen Zahariev, Director, Corporate Recovery
Rome, June 2016
EBRD’s role in NPL Resolution and
Restructuring Policy
•
A successful NPL resolution strategy relies on coordinated action with other
multilaterals and Policy Dialogue with local regulators and Governments
EBRD Legal Reform Team
Supporting legal reforms
Private principles for out-of-court
restructuring
Capacity building/training
on insolvency

Economics,
Policy & Governance (EPG)
Policy Dialogue
Technical Cooperation
Vienna 2 Initiative
FOR MORE INFORMATION VISIT: http://viennainitiative.com/npl-initiative/
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NPL Policy developments in CEE:
 SLOVENIA: A policy strategy paper for Slovenia containing a
section on “Solving the non-performing loan problem”
 ROMANIA: a series of proactive steps and recommendations
established by the National Bank of Romania aimed at
supporting the sustainable resolution of NPLs in the banks’
balance sheets
 HUNGARY: the recent set up of a bank asset management
company in Hungary (MARK).
 FOR MORE INFORMATION VISIT: http://viennainitiative.com/npl-initiative/
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EBRD’s Role in NPL Transactions
•
EBRD is working on different investment solutions to support NPL resolution
Investor in NPL portfolios (requires intensive DD )
 Support for distressed asset investors as a minority investor consortium
member
•
Investor/lender in single-credit corporate restructurings
 Support for SPV or asset management structures
with Private Investors
•
Support/financing of NPL asset managers/servicers
 Focus on integrity and collection practices (Retail)
 Support work-out of corporate NPL porfolios (including “new money”).
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NPL sales in CEE gathered momentum
•
Over €4bn of NPL transactions
completed in CEE in 2015 with an almost
equivalent notional of transactions not
completed
•
Romania and Poland accounted for circa
80% of total transactions in CEE over the
last 18 months
•
Portfolios offered are often a mix:
consumer unsecured, CRE-backed and
corporate/SME portfolios
•
Sellers have been predominantly
subsidiaries of major European banking
groups
Source: KPMG, Deloitte, Debtwire, EBRD analysis
•
NPL transactions in CEE have significantly increased in 2015
•
Despite such encouraging development a significant amount of portfolio sales were
also not concluded: poor data quality, illiquid real estate market and inefficient
legal/regulatory frameworks are often the reasons behind the pricing gap
•
Further sales foreseen for 2016 as investors focus in CEE
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EBRD
engagements related to NPL asset managers
Frontex International
TurkAsset
 Invested debt & equity in 2011
 Provided debt in 2014
 Leading NPL asset manager in
Turkey
 Leading NPL asset manager &
servicer in Bulgaria
 Market is
corporate
 Unsecured retail loan sales
both
retail
and
 All major private banks selling
regularly
KKR/Pillarstone
 In process of negotiation
 “New money” co-financing
facility for on-boarded of Greek
NPLs
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Some Emerging Patterns
 For unsecured retail loans the recovery process is mostly based on an
efficient collection service and restructuring of debt, which can be particularly
fruitful in the context of an economic recovery. Such transactions are often seen
as a good stepping stone to new markets as investors can leverage on services
provided by local collection agencies.
 Residential loans/Mortgages may be less attractive to investors due to the
stricter regulation, making enforcement and collection more challenging.
 For corporate/SME loans secured by commercial real estate: detailed
valuation is essential. Liquidity of RE market and efficiency of foreclosure will
weigh on price. Economic recovery essential for rental and exit.
 Corporate and SME loans requiring ability to turn around and restructure the
underlying company are more challenging and may need additional funding to
recover to a ‘going-concern’ basis. Ability to take control, and/to ‘cram down’
minority claim holders may be important considerations. The recovery process
will require turnaround experts, legal expertise for restructuring of companies
and a longer workout process with a more hands-on approach relationship with
the borrower.
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Support from regulators and government
• Issues such as lack of tax incentives upon loan transfer or write-offs
or legal uncertainties related to the bankruptcy and insolvency law are
obstacles to the development of the distressed asset market.
• development of alternative solutions for asset transfer, such as
securitisation, can provide impetus for market development.
• Several authorities across the region have elevated NPL resolution in
their respective agenda, underpinned by more stringent supervision.
• National action plans or NPL resolution strategies will inspire
confidence that a coherent effort is made across all parts of the
government, and regulatory authorities.
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