Impaired Loans: Handle with Care - How to Manage, Account For and Collect Them
Fred Vacelet, MBA, FRM/PRM, CTM, IFQ, is an international Financial Risk Management Consultant with an expertise in Risk Management methodological frameworks. His experience spans some 25 years, advising international banks and software houses on risk management. Fred holds various degrees, including from London Business School, England, with post-graduate studies at the Technische (then West)-Berlin, Germany, and Keio, Japan, universities. His client list includes ABNAmro, Barclays, Credit Suisse, National Bank of Egypt. He is published author on risk management and Basel Accords, and a regular speaker at international conferences. Fred writes and presents training courses and workshops on risk management and Basel Accords.
Impairment in any form of lending is but a usual mishap that will typically occur, as a rule of the game. For bankers, loan impairment is something to prepare for, as early as before setting up operations, and to permanently upgrade. Failure to do that reveals costly. Refusal to do that, though, deprives the bank of lending premiums, in that the bank will not lend to credit-risky borrowers. Hence it is mission-critical for lenders to actively choose one’s area of risk appetite and develop credit risk management strategies based upon it.
- Underlying reasons for growth of impaired loans
- Segmenting customers
- Expected Credit Loss
- The credit lending process
- Credit risk handling
- Credit risk mitigants
- The impairment process
- Handling credit risk
- Credit reporting
- Identifying non-cooperative borrowers
- Credit restructuring
- Credit recovery
- Optimising credit risk management
Course Level - Intermediate
Who Should Attend
Why Should Attend
At every stage in the lending process, proactive and reactive steps must be taken to handle the risks of impairment. Yet these must be actively selected. We detail here, along in the lending and recovery process, a few of these steps. Some of these may seems obvious… Yet lenders, in all market segments, time and time again fall into these traps, want to ignore that NPLs are inexorably growing, until the state of the portfolio can no longer be hidden to the regulator and, worse, to the public at large.
In such cases, historically more frequent than most people will care to recall, it is often revealed that a range of management failures and cognitive biases have been occurring over years, starting by failures of governance, complacency, unwillingness to recognize a deteriorating situation, internal biases in communication, to name but a few.
In this webinar, we highlight some situations in which the above issues have not been spotted in time, or not been acted upon, and their consequences. We indicate a range of strategies to handle credit risks in a systematic way, and to set up risk controls that balance costs and potential losses.