Non-Performing Loans Management

Unit 1 - Fundamentals of NPL Management
The Scope of NPL Management

• Positioning NPL Management within the credit and operational risk universe
• Exploration of fundamental perspectives on NPL Management for Large corporate borrowers as well as Mass-market consumer, microfinance and small business borrowers
• Learning the full scope of NPL management ranging from legal action in a creditor committee and distressed debt investors, bad banks to arrears management statistics and behavioral collections.

Regulatory Guidance on NPL-Management

• Discussion of BCBS, ECB, EBA and other relevant examples of banking sector guidance in general and specifically under the circumstances of the COVID-19 recession
• Highlighting the relevance of best practices also for non-banks and any business in general that runs a receivables book

Organizational dimension of NPL Management

• Form the basis for decisions "credit recovery versus work out-strategy"

Unit 2: Arrears Management in Retail and Small Business Portfolios

• Arrears based portfolio metrics: Vintage analysis, transition matrix (roll-rates), transitory arrears, LGD tracking, conditional LGD rates and collections scoring.
• IFRS 9 Empirical Expected Credit Loss Reserves

Unit 3: Corporate Bankruptcies / Collateral / Restructuring

• Illustration of legal basis for court-supervised bankruptcy and restructuring
• Covering key legal constructs: Events of default, default definitions, the rank hierarchy, netting and offsets, separation and attachment of assets, link between NPL and debt forbearance, debtor in possession financing, subordination of shareholder loans, claw-backs from owners and managers, executing on personal sureties, role of CDS
• Specific aspect: COVInsAG ("Suspension of the insolvency request") - discussion of a practical case study ("insolvency proceeding under protective shield")

Unit 4: Legal Collections in Retail and Small Business Portfolios

• Dealing with mandated payment holidays and forbearance
• Tracking redefault rates, managing, incentivizing in house legal collections versus collections agencies
• Responsible collections practices, the role of credit bureau and credit reporting agencies
• Special case study - how to value a distressed consumer / small business portfolio

This course is of interest for managers and financial professionals in a broad range of industries, including banks, non-bank lenders, insurance providers, telecoms, commerce, manufacturing and health care. The content is particularly relevant for risk analysts, business process engineers, software developers, auditors, consultants and other professionals interested in getting their money back.

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