What's on your mind?
Rationale to sell:
- Generation of cash flows in the short term can be better used by the lender
- Improved regulatory capital position (e.g., Basel II)
- Reduction of Risk Weighted Assets as non-performing loans typically has high-risk weighting
- Potential improvement in regulatory capital position (depending on sales price achieved)
Better market performance
- Improvement in credit ratings and increase in shareholder confidence
- Reduction of future risks from the balance sheet
- Final resolution to problems posed by non-core and non-performing loans rather than dealing with ad-hoc challenges
Less resource constraints and better resource allocation
- Focus on core business opportunities
- Reduction in internal reporting
- Strength/capacity of work-out department
Rationale to buy:
Effective debt work-out / restructuring abilities
- The buyer often possesses specialised knowledge, experience and capacity to enhance the recovery of non-core and non-performing loans
Potential high return on investment
The buyer acquires non-core and non-performing loans at a value below its expected recovery
Allows non-traditional buyers to access credit markets
Buyers may not need to hold banking licenses and therefore may have lower capital needs
Entering new market and relationships
Increasing market share
- Efficient utilisation of already available resources (e.g., systems and personnel)
Bringing you peace of mind
Buy Side Portfolio Solutions Group: KPMG provides advice and practical assistance to clients seeking to invest in non-core and non-performing loan portfolios. Our advice and practical assistance ranges from assisting the client in identifying opportunities through to portfolio assessment/due diligence, valuation and advisory around the acquisition process and completion of the transaction.
Sell Side Portfolio Solutions Group: KPMG provides advice and practical assistance to clients seeking to dispose of non-core and non-performing loan portfolios. This ranges from assisting the client in portfolio assessment through to the end-to-end sale process and investor solicitation/management together with post-deal services.
Advisory Services: Our services include strategic portfolio review and realisation options (ie. “keep vs. sell”) either as a standalone exercise or as part of the wider sell-side service offering; Asset Management Company and ‘Bad Bank’ advisory; and portfolio management and performance optimization.
What's in it for you?
- KPMG can undertake a robust market sounding or indicative bid process for debt portfolio(s), or tranches therein. This will help determine upfront the potential market value/preferences.
- KPMG’s dedicated global team, which includes an in-house U.S. broker dealer for all U.S. investor contact, is focused on mapping specialist investor preferences locally and globally, and in attracting investors to deals throughout Europe, Asia/Pac and the Americas.
- We invest time to analyse underlying portfolio information and indicative investor feedback before designing sale processes and selecting sale tranches that meet your objectives and buyer demand.
- Parallel to the sale process, KPMG specialists can work with vendor staff to understand the key drivers of portfolio performance and collections, and their likely keep/sell value and potential capital implications of sale/retention.
- By using an independent sales advisor, both seller and buyer will have comfort that the process will be fair and conducted at arms length. This is particularly pertinent for state owned entities and competitive processes.
KPMG is the only firm with a truly dedicated global team concentrating on Loan Portfolio Advisory. The Portfolio Solutions Group is a team with global expertise in delivering debt portfolio sellside, buy-side and advisory work – their reputation and extensive client portfolio speak for themselves.
Project Europa: The PSG team undertook a detailed keep/sell valuation of a major investment bank´s loan and asset portfolios and platforms under various scenarios in order to realise liquidity for the client. A detailed market assessment was undertaken for the entire asset portfolio, involving over 150 interested parties which was filtered down to an initial pool of 20, with 5 final bidders.
PSG’s global team designed and managed the end-to-end sale process, including the due diligence, dataroom, investor management and legal advisor oversight for each loan portfolio/servicing platform in each market, drawing on and managing a multi-disciplinary team.
The PSG were instrumental in attracting investors to the deal as a result of its independence, global reach and vast international experience working on behalf of both buyers and sellers across the globe.