Stressed Asset Management Manual for Major Serbian Bank

Credit Risk, GBRW Consulting, GBRW Group, Problem Loan Management, Risk Management

GBRW was retained by a major Serbian bank to support the development of a detailed policies and procedures manual for the Delinquency Management Department (DMD), responsible for the identification, management, and reporting of Non-Performing Loans (NPLs) in the Bank.

The purpose of the manual was codify the rationale and procedures of the Delinquency Management in order to protect the capital and/or income of the Bank, and make a satisfactory cost-effective return on the assets allocated to the DMD. The key principles in the manual were to establish clear departmental roles and responsibilities in the flow of stressed assets from Business-as-Usual (BAU) front-office departments to the specialist stressed asset management unit. It also aimed to set a Key Performance Indicator (KPI) framework to incentivize the cost-effective management of stressed assets, and maximise recoveries. This involved emphasizing the swift realization of cash to enhance shareholder value while reducing administrative and legal costs.
It was also very important for the policy to meet international standards of transparency, governance and business ethics.

Deliverables included:

- Establishing NPL and NPA flows from responsible departments to the DMD, in accordance with the Bank policies;

- Management of the recovery of funds from the stressed assets by optimising value and generating the most cash from these assets for BIB thus increasing shareholders’ value;

- Establish the model that ensures reducing losses in the Bank’s financial results;

- Limiting the time that the NPL/NPA is managed by the DMD to the shortest possible period;

- Recovering the maximum of prior provisions in a cost-effective manner; and

- Meeting international standards of transparency, governance and business ethics.