A range of potential options are to be considered by financial institutions when determining REO’S , secured NPL’S and portfolios strategy, as part of the decision making process for selected loans. A thorough assessment should be conducted to determine the best realization strategy for both the portfolio, sub-tranches and for achieving the best solution for the bank.
Clean Disposal / Sale
- Sale of loans outright either on a standalone basis for single assets, or for segments of the portfolio to our partner investors and/or other investors introduced by us.
- REO or NPL servicing would also be transferred.
- Future servicing costs, P&L and capital issues dealt with “up front” by the bank.
- Redeployment of management, staff and other resources including the release of documents and IT space and the reduction of holding costs.
- Improved liquidity, capital adequacy and possible taxation advantages for banks.
- This will typically include a servicing secured NPL’S which is desirable for strategic reasons (e.g. lack of servicing or collection capacity, rapidly increasing levels of arrears, unfinished projects).
- The Bank would transfer loans to an SPV and a minority/majority share would be sold to our partner investors and/or other investors introduced by us. We would also assume the servicing role for the assets/portfolio.
- A minority share sale for the Bank would be preferable, and may provide a capital/liquidity uplift, with a lower P&L hit.
- Allowing the Bank to share the upside with or without de-recognition on the disposal.
- Possibility to apply to the whole portfolio and to provide solutions for the Bank staff/systems.
- The investor takes control of the management, thereby accelerating recoveries.
- Provides capital uplift if structured optimally.
- The inclusion of portfolios or single assets with loans which have defaulted and have moderate/high provisioning or recently non-performing, finished or unfinished projects). The timing/costs to collect may be considerable or uncertain.
- The Bank would appoint us as a servicer undertaking special primary servicing for the portfolio.
- We would be responsible for the day to day asset management of the selected portfolio.
- We can restructure the portfolio in the short to medium term and revisit the strategy in 12-24 months.
- Scaling and focusing on restructuring and servicing.
- Likely to include longer term loans with stronger borrowers and lighter provisions. The potential discount through a sale, in the current market, of these loans is likely to compare unfavorably with a hold to maturity outcome.