Sergey Shpeter is a speaker at a Conference on Bank Debt Management
13.02.2014Sergey Shpeter, Senior VP at National Recovery Service, delivered a speech at the conference Bank Debt Management. Integrating Innovation and Complying with New Regulations, held in Moscow on February 13.
In his speech, Sergey Shpeter spoke on the last tendencies in the retail bank market and on their influence on work with problematic assets.
At the beginning of his report, Sergey Shpeter presented data on deterioration of macroeconomic indicators which influence personal income of the population and retail lending growth dynamics. He remarked that for borrowers it means the growing lack of confidence in their financial abilities and, as a result, leads to deterioration of their loan repayment discipline.
At the same time, the Bank of Russia is taking measures to slow down retail lending. They include an increase in the minimum level of capital, an increase in reservation norms and adoption of Basel III standards. In addition, the Law On Consumer Loan was passed, limiting the crediting rate, which will undoubtedly decrease the retail loan margin. As a result, the banks face a problem of slowing down of lending growth accompanied by an increase in volume and share of overdue debt.
According to S. Shpeter, during worsening of the market performance, there are several measures to be taken by banks, which may help optimize work with problematic portfolio: increase in the outsourcing volume, development of legal outsourcing and sale of portfolios at earlier stages.
Sergey Shpeter noted that introduction of new reservation norms leads to new strategies of debt processing: “Previously, we were looking exclusively for recovery of the biggest amount of funds. However, in the number of cases now it is not this factor, that is important, but the return of the debtor to the repayment schedule. That way, we not only return the funds in absolute terms but also provide the bank with current capital by freeing the reserves. Accordingly, we believe that it would be correct to adjust remuneration system in a way to make it account for the volume of reserves freed by the bank with our assistance.”
S. Shpeter also spoke on transformation of the debt transferred to recovery agencies: “On the one hand, there is evident growth of early overdue debt volume, which is often transferred to recovery agencies from the 31st day. On the other hand, we also see growth of overdue debt, transferred to second and subsequent placements. In the process, with late overdue debt the level of promises made by debtors fell dramatically.”
Speaking about changes in the reasons for not paying, Sergey Shpeter brought to notice the growth of the number of debtors, explaining the debt with temporary financial problems.
“In many years of our work in the market, we came to understand that the debtor is our client. Our primary objective is to work with a debtor in such a way that resolution of his financial problems does not prevent him from remaining a bank's client,” S. Shpeter said.
At the end of his report, the Senior VP at NRS noted that if banks provide more reliable information on debtors to recovery agencies, this would significantly decrease the number of complaints on recovery agencies’ calls to wrong numbers, such complaints currently prevailing.