How do you foresee lenders coping with the volatility ahead, and resulting increase in corporate insolvencies?
Lenders need to be sure they have a right-sized team in place with the appropriate skill set and seniority. Having appropriate monitoring systems in place is also a requirement so that the restructuring teams are involved at the right time.
What are your strategies for managing the rise in corporate defaults. What measures are you deploying to keep NPAs in check?
The Special Operations Department at IFC has a Watch List of potential distressed projects which is constantly monitored. Nominations to the Watch List are triggered by certain criteria being met such as internal credit rating downgrades. More generally, the involvement of the Special Operations team is activated when one of 13 different criteria are met: these include payment defaults, litigation proceedings, strong suspicion of illegal activity, and the involvement by other lenders of their restructuring/special assets units. Members of our team also participate in regular regional and industry specific portfolio meetings to monitor issues on our investment projects effectively.
You’re joining the panel discussion focusing on changing approach of lenders to NPL management. What are some of the key messages you aim to share through the panel?
I think my key message would be to make sure you have the right team in place to handle the distressed projects and at the right time. I’m happy to share the criteria at IFC for our Special Operations team to get involved and what we do to help make sure that this occurs as soon as possible. The transfer of distressed projects to the team with the restructuring skill set needs to happen in an almost automatic manner and experience informs that the sooner this occurs the better the restructuring (or recovery) outcome will be.
Do you believe conference such as FRC 2024 can play a vital role in pushing the sector forward. What are your recommendations
Sharing experiences and best practice can only help our sector work better as institutions and in our mutual collaborations. In particular, even though each problem situation is unique, and may also be constrained by certain legal jurisdictions, the exchange of ideas on tools and methods to arrive at sustainable restructuring solutions can only be advantageous to all. I look forward to comparing notes with my restructuring colleagues at lending institutions and also engaging with potential advisors that could assist on the more complex projects ahead.