Distressed debt services

Prior to the global credit crisis the lending market had undergone a period of rapid growth. Lending doubled in volume over the last two years, with retail lending demonstrating more than four-fold growth. It is only natural that in this context banks found it more difficult to manage their credit portfolios and that non-performing loans (NPLs) have become a growing concern for Russian bankers. The scale of the challenges faced by many Russian banks has been magnified by the credit crisis. Worst affected are those banks with a mismatch between assets and liabilities and/or heavy dependency on international whole sale funding. Restructuring the balance sheet has become a priority for many institutions. The sale of NPLs, as portfolio or single credit transactions, is an efficient and effective means of resolving distressed loans.

If this is your situation

• You need to improve the liquidity and capital adequacy position
• You need to improve the capital and debt markets perception and achieve higher credit ratings, which in turn reduces funding costs and increases shareholder value
• You need to free up management’s time and other resources

As financial advisor, we manage the whole process of sale preparation, execution and completion, and bring increased transparency, independence and international best practice methodologies to the NPL portfolio transaction process. Key features of our approach and methodology include strategy developement, sale preparation, sale execution, following a transaction and ongoing support.

Strategy

We provide strategic advice in the early planning stage to help management identify and evaluate the various alternative approaches.

This phase includes:

• Portfolio review and classification, and recommendations on the most feasible and value enhancing portfolio stratification, including which assets should be included or excluded from the sale Due diligence review and validation of the loans to be offered in the sale
• High-level validation to determine a realistic sale price

• Preparation of bid documents and marketing materials and establishment of data room protocols/procedures
• Validation of the completeness and accuracy of data to be presented to investors
• Establishing investor contact
• Assessment of potential tax costs for the seller and investors, analysis of the sales structure from a tax perspective

PricewaterhouseCoopers will provide the necessary support in:

• Bid management, including meetings with bidders and administering the bidders’ due diligence
• Price negotiations and in other terms and conditions of the transaction
• Signing and closing the transaction
• Preparation of comfort letters on the tax implications of the transaction

We make extensive use of a dedicated web site, not only to market the transaction, but as a communication platform for the sale process, including a virtual data room, if appropriate.

Ongoing support

Banks which remain active in the relevant loan segment after the first transaction will continue to generate further non-performing loans in the future. We can help a bank to design into its collection processes automatic “flags” to identify loans for inclusion for future non-performing loan portfolio transactions.