Impaired Loan Advisory Services (ILAS)

Transcription

1 CORPORATE FINANCE Impaired Loan Advisory Services (ILAS) São Paulo, Brasil 10 April 2008 ADVISORY

2 There are NPL Opportunities Across the Globe We have recently seen NPL portfolios and single name transactions in the following jurisdictions: Australia Italy Argentina Bangkok Japan Korea Brasil Canada China Czech Republic Germany Greece Hong Kong India Indonesia Mexico Spain Poland Germany Turkey Italy Greece India Thailand South Korea China Philippines Malaysia Malaysia Mexico Philippines Poland Singapore Thailand Turkey UK USA Brazil Key Emerging Currently active Inactive/in decline Hot prospect Argentina 1

3 Market Size Largest known concentrations of NPLs (estimates at May 2007) Germany China Brasil Japan Indonesia India Malaysia Taiwan Poland Thailand Korea Argentina Czech Republic Philippines Source: KPMG LLP Total NPLs (US$bn)

4 NPL Drivers Portfolio composition Disposal structure Disposal options Number/volume of assets and classes: Corporate Small medium enterprise Retail Current or aged Security Regional or national Sector Portfolio composition Level of demand Sellers involvement in workout Size of portfolio Maturity of market Access to capital market Portfolio auction: Cash sales Deferred consideration Invitation only - Bilateral or small group 3

5 Key Issues Maturing NPL market Investor relevant information Methodology differences in pricing Secondary market opportunity Price erosion Taxation Sale structures Servicing capabilities 4

6 Key Buyers Investment banks Special situation funds Developing buyers 5

7 Buyers Perspective Buyers have given feedback on those issues Access to credit and account officers Timing of release of SPA Breakdown of principle, interest and penalty charges Buyer issues Adequacy of sellers representations and warranties Quality of data room information all impact value 6

8 Current Situation of NPL Brazilian Market kpmg 7

9 Brazil Current Situation Macroeconomic Overview Public debt X Credit (GDP%) 60% 50% 40% GDP% 30% 20% 10% 0% * * Jul/ 2007 Source: Central Bank of Brazil Credit/ GDP Public debt/ GDP 8

10 Brazil Current Situation Macroeconomic Overview (cont.) Country Risk - Brazil (Embi+) Basis points Record down Jan 00 Jan 01 Jan 02 Jan 03 Jan 04 Jan 05 Jan 06 Jan 07 Source: Central Bank of Brazil 9

11 Brazil current situation Macroeconomic overview (cont.) NFS total credit R$ billion Commercial 10% Services 16% 1000 Industry 23% R$ billion Rural 9% Public Sector 2% Real State 5% Consumer 35% CAGR = 22.5% Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Source: Central Bank of Brazil A - C (0-60 days past due) D - H ( days past due) 10

12 Brazil current situation Macroeconomic overview (cont.) Credit/GDP 180% 150 % 120% 90% 60% 30% 35% 0% Ireland England China Spain Chile India Bulgaria Brazil Russia Zim babwe Venezuela Argentina Source: INEPAD and FMI Global Financial Stability Report

13 Brazil Current Situation Trading Credit Trade credit/gdp Trade credit breakdown (2006) 15% 14% 37% 17% Commerce % GDP 13% 12% 11% 12.5% 13.1% 13.8% 14.1% 14.3% Industries Services 10% 46% * Source: SERASA 100% = R$297 billion Source: SERASA Growth revenues and credit portfolio 2002 to 2006* Segment Commerce Industries Services Source: SERASA Revenues Growth 28% 27% 14% * September 2006 Credit Portfolio Growth 30% 20% 13% * September Credit card, checks or trade notes - that are on the company balance sheets. Over the last four years, this portfolio has expanded by 30% while revenues grew 28%. Since 2002, credit extended by industry has grown 20%, lower than revenues expansion which increased 27%. 12

14 Brazil Current Situation Evolution of Delinquency Within the NFS Risk weighted total credit of the NFS - February/08 (R$ million) Aging Public Real Industry Sector Estate Rural Commercial Consumer Services Total AA 8,590 87,761 7,369 19,981 23,871 33,181 52, ,156 A 4,665 72,733 16,312 25,831 36, ,739 54, ,385 B 2,336 38,787 7,692 20,285 22,419 44,360 29, ,175 C 1,002 12,724 10,576 13,360 9,544 27,499 13,150 87,856 D 748 1,994 1,344 4,773 1,805 10,700 2,370 23,733 E 1, , ,883 1,970 12,047 F , ,606 G , ,032 H 185 2,276 2,727 2,733 2,226 15,334 3,111 28,592 Total 18, ,512 47,051 90,579 98, , , ,581 D-H 78,010 Source: Central Bank of Brazil 13

15 Brazil Current Situation Evolution of Delinquency Within the NFS (cont.) Credits between 61 to 360 days past due 80 CAGR = 13% % % R$ (billion) 40 11% 10% 9% 8% 8% 20% 10% Credits between days past due % of total credits Source: Central Bank of Brazil * February 2008 * 0% 14

16 Brazil Current Situation Evolution of Delinquency Within the NFS (cont.) Break down of credits between 61 to 360 days past due February/08 11% 3% 8% 49% 7% 8% 14% Public Sector Industry Real State Rural Commercial Consumer Services Source: Central Bank of Brazil 15

17 Transaction Structures - Brazil Outright Sale Investor ABS(Bond, Stock) Purchase Price Seller Purchase Price Target asset for sale FIDC Asset Management Investor s AMC Outright Sale (bank as a servicer) Investor ABS(Bond, Stock) Purchase Price Seller Purchase Price Target asset for sale FIDC Asset Management Bank as AMC 16

18 Transaction Structures - Brazil (cont.) Joint Venture Seller Investment partnership 100% - X% of Purchase Price Investor Y% ABS (Bond, Stock) 100% - Y% ABS (Bond, Stock) Seller X% of Purchase Price Target asset for sale JV-FIDC Asset Management JV as AMC 17

19 FIDC Structure for NPL Deals Bank Administrator Sale Services Investor FIDC Custodian Representation Services Audit Credit bureau Restrictive Master Servicer Remarketing Auctioneer Judicial Extra Judicial Plaintiff Defender Lawyer Collectors Master Servicer Managing the cycle of recovery credits; Strategy of collection and reports; Debtors Definition with the investor the total budget of collection process. 18

20 Pricing Methodologies Judgmental vs statistical Single accumulation vs portfolio benchmarking Corporate vs retail I II III IV Typical Bank Practices PURE JUDGEMENT TEMPLATE Consumer Lending Small Business Large Corporate SCORESHEET Credit Cards PURE MODEL Large average loan size Large average loan size Complex, non-standard product structure Complex, non-standard product structure Low frequency of credit review Low frequency of credit review Judgment-oriented credit culture Judgment-oriented credit culture Small average loan size Small average loan size Simple, homogeneous product structure Simple, homogeneous product structure High frequency of credit review High frequency of credit review Model-oriented credit culture Model-oriented credit culture 19

21 KPMG kpmg 20

22 KPMG s Service Offering KPMG have identified three service offerings for buyers and sellers of distressed loan portfolios: Portfolio divestment Portfolio acquisition Portfolio management 21

23 We Use Specialist Experience Across the Firm Area Restructuring Transaction Services Corporate Finance/ Real Estate FRM solutions Skills/Experience In depth knowledge of recovery frameworks Experience of distressed assets and recovery against those assets Relationships with large number of potential buyers Due diligence expertise Established process Acquisition/disposal expertise Negotiation assistance Experience of deal structuring Technical expertise Tax/Regulatory Global experience in tax both pre and post transaction 22

24 We Use Specialist Experience Across the Firm Pre-data room portfolio assessment Dataroom based portfolio assessment Portfolio transfer Portfolio management Restructuring Transaction Services Corporate Finance Real Estate FRM solutions Tax/Regulatory Securitisation Services 23

25 Why KPMG? Proven ability to provide robust opinions Depth of relevant market and functional experience Proven ability in our deliverables, including global expertise, if required Our team is committed and available Available specialists for any follow on Global experience and local knowledge 24

26 Co-ordination The team To maximise value to clients we team local knowledge with global experience. Global Sponsor (Mick McLoughlin) TS Sponsor Gopal Ramanathan Yannick de Kerhor Co-ordination role (David Burlison/Marykay Fuller/ Josie Richardson) Marketing support Jonathan Lavender ASPAC Chino San Jannie Wong Europe Tammo Andersch Frank Nagel Americas Todd Martin Salvatore Milanese 25

27 Questions kpmg 26

28 Presenters contact details David Burlison KPMG LLP +44 (0) Marykay Fuller KPMG LLP +44 (0) Salvatore Milanese KPMG Corporate Finance Ltda. (Brazil) The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. The services mentioned herein are offered by member firms of KPMG network of independent member firms affiliated with KPMG International.