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Collection agencies and banks: examples of partnership in Europe and reality of Russian market. Mariusz Kloska Managing Director - EOS Russia 1 Number of average consumer credits per capita in kEUR – highest values in Ireland, Spain and UK in Europe Selected European countries Ireland 6.8 Spain 5.0 United Kingdom 4.2 Greece 1.1 Croatia 0.9 Romania 0.9 Ukraine 0.8 Germany 2.1 Turkey 0.6 Belgium 2.1 Russia 0.5 Poland 2.1 Bulgaria 0.5 Baltic Countries 0.5 Italy 1.7 Portugal 1.5 Macedonia 0.5 Netherlands 1.5 Slovak Republic 0.4 Slovenia 1.4 Hungary 0.4 Czech Republic 2 3.2 Czech Republic 1.1 Serbia 0.1 Ratio of consumer credits to GDP – Ukraine and Poland with highest percentage Selected European countries in % Ukraine 33.0 Poland 22.5 Spain 21.0 Ireland 16.1 Greece 7.9 Slovenia 7.8 Czech Republic 7.0 Germany 6.9 Italy 6.5 United Kingdom 14.2 Belgium 6.4 Romania 13.7 Russia 6.2 Turkey 11.4 Netherlands 4.2 Macedonia 10.5 Hungary 3.7 Bulgaria 10.3 Slovak Republic Portugal Baltic Countries 3 15.0 Croatia 9.3 8.4 Serbia 2.9 1.1 Average payments for banks decreased especially in Russia and Poland dramatically from 2008-2010 2008 (=1) 2009 2010 1,00 1,00 1,00 1,00 0,88 0,87 0,88 0,74 0,67 0,71 0,54 0,58 Russia 4 1,00 1,00 0,56 0,48 Poland Czech Slovakia Romania 0,63 0,58 Hungary Average payments for banks decreased in most of the countries in Eastern Europe except from ex-Yugoslavia 2008 (=1) 2009 2010 1,0 0,97 0,99 1,00 1,07 1,00 1,00 1,00 1,07 1,00 1,14 0,87 0,85 1,00 0,94 0,74 0,67 Bulgaria 5 Greece Romania Serbia Macedonia 1) Telco data due to business in Slovenia. 2008 figures are not available Slovenia1) UK is a good example where markets can go in future in EE UK Market Maturity Embryonic EOS Top 10 Market entry 1993 Mostly contingency collection, therefore EOS does not suffer from impairments like competitors Growth Maturity Key Facts Debt Collection Market Decline Most mature market after US, DP market A lot of private equity companies invested in NPL and bought DCAs During financial crisis market suffers a lot (impairments) 500 DCAs on the market High level of outsourcing – 42% of NPL are collected from external DCAs 47% of outstanding debts are older than 60 days NPL volume in 2009: EUR 155 bn (plus 44% compared to 2008) Key Market Players First Credit, EUR 85m revenue Lowell Group, EUR 56m Robinson Way, EUR 50m Moorcroft, EUR 50m Wescot, EUR 39m Aktiv Kapital, EUR 20m Key Economic Figures GDP ($bn) GDP growth (%, local currency) Inflation (%) Inhabitants (m) Outstanding consumer credits ($bn) 6 2009 2010e 2011e 2.183 2.222 2.297 -4,9 1,3 2,5 2,2 2,7 1,6 61,8 62,2 62,6 371,7 n/a n/a The debt management market in Poland Key information about the market Changed profile of debtor, Debtors is more like client than enemy! Trade Information bureau Linear and progressive comission, Securitization Funds, E-court , In total, the segment of debt recovery of purchased debt packages increased in 2006 – 2009 by 22 percent, Size of collection market should be stabile bu 2014. 7 In Russia, Poland and Czech Republic a debt collection license is not needed – only in Poland regarding servicing of funds Summary Regulations debt collection Bulgaria Regulations debt purchasing No Comments No No license required Poland No No No (but law for EUR 350 k minimum capital required for debt collection services securitization) No License required Czech Republic No No license required 8 License from Polish Financial Supervisory Authority is only required if you handle claims purchased by investments funds (securitisation transactions) License only needed for servicing of NPLs from investment funds Law under consideration regarding debt collection license and fee policies towards debtors There are in Hungary and Romania regulations regarding debt purchasing – only in Hungary a special license is required Summary Regulations debt collection Slovakia No Regulations debt purchasing Comments No No license required Hungary No Yes Special DP license required Romania No Yes No license required 9 For debt purchasing special license is needed, company must be an incorporation with minimum of 200TEUR capital, direct monitoring of authorities, detailed quarterly reports to authorities necessary, long procedure to receive license No special law in Romania regarding debt collection services, only general laws covering data and consumer protection Debt Purchase – laws are covering the transfer/assignment of receivables; no special vehicle is necessary for it. One company can do DP and debt collection How many competitors are there on the German market? Month No. of ‘registered’ debt collection providers 07.2009 08.2009 09.2009 10.2009 1,457 1,512 1,558 1,628 … 08.2010 1,746 Increase in providers of pre-litigation legal services by about 24 competitors per month! by about 15% within 12 months! And not forgetting approximately 150,000 lawyers! The German debt collection market is highly competitive and only sparsely concentrated. This also applies to the B2B debt collection niche! 10 Prove what you promise – USPs in the B2B market We promise quality and we deliver quality – The proof How our clients perceive our quality and service: Friendliness Ø 4.44 Availability Ø 4.28 Service focus Ø 4.17 Honesty Ø 4.17 Commitment Ø 4.13 Punctuality Ø 4.12 Response time Ø 4.08 Service quality Ø 4.20 Very dissatisfied Source: EOS KSI client satisfaction survey 2009 (Sept./Oct. 2009) 11 2 3 Data protection Ø 4.29 Accuracy Ø 4.13 Competence Ø 4.11 Focus Ø 3.97 Processing time Ø 3.75 Realization Ø 3.68 Reporting Ø 3.62 Quality of products Ø 3.93 4 Very satisfied Prove what you promise – USPs in the B2B market We promise quality and we deliver quality – The proof Even our defaulting clients experience quality and service: Understanding Ø 4.27 Availability Ø 4.21 Punctuality Ø 4.12 Friendliness Ø 4.04 Focus Ø 4.12 Data protection Ø 4.09 Competence Ø 3.95 Remain clients Ø 3.80 Neutrality Ø 3.78 Ø 3.64 Response time Ø 3.89 Honesty Ø 3.79 Transaction handling quality No pressure Ø 3.62 Reasonableness Ø 3.62 Service quality Ø 3.99 Quality of service Ø 3.86 Very dissatisfied Source: EOS KSI defaulting client satisfaction survey 2010 (March 2010) 12 2 3 4 Very satisfied