Record value of bank claims sold in 2013
- After a recent purchase from Agricole Bank Polska of a portfolio worth nearly 100 million PLN, a securitisation fund owned by BEST purchases from Bank Handlowy a debt portfolio with a par value of nearly 177 million PLN.
- According to the BEST Group's estimates, the bank claims' trading market in 2013 may reach a record level, exceeding the 2012 figure of 9.3 billion PLN.
On 19 December 2013 BEST I non-standard closed-end securitisation investment fund (BEST I NSFIZ), a 100% subsidiary of BEST, entered into an agreement with Bank Handlowy, according to which BEST I NSFIZ will purchase for 10.1 million PLN a debt portfolio with a total par value of nearly 177 million PLN.
This is the second such significant agreement concluded in this quarter by the BEST I NSFIZ. Less than a month ago, the fund signed an agreement with Credit Agricole Bank Polska pursuant to which BEST I NSFIZ purchased a debt portfolio with a total par value of nearly 100 million PLN.
“These transactions demonstrate that the BEST Group may consider the past year a success. At the end of 2013 the total value of debt portfolios managed and operated for the fund's own account will exceed 7.4 billion PLN,” indicates Krzysztof Borusowski, President of BEST. “For several years now we have witnessed dynamic growth of the debt trading market. The BEST Group focuses on acquiring portfolios of banks claims, representing a majority of the market. According to our estimates, the total value of bank claims sold in 2013 will reach a record level, exceeding the 2012 figure. We estimate that in 2013 this market segment will be worth about 9.5 billion PLN, whereas in 2012 it amounted to less than 9.3 billion PLN,” adds Borusowski.
So far, annual purchases of the securitisation funds managed by BEST TFI (a 100% subsidiary of BEST) represented approx. 13-14% of the total value of all portfolios sold by Polish banks. In 2013 the funds managed by BEST TFI acquired 9 portfolios with a total par value of more than 800 million PLN. This is less than in previous years, which is connected with the fact that – according to the current investment policy – the BEST Group now prefers relatively large debt portfolios, while in 2013 banks sold debt in smaller blocks.
BEST I NSFIZ is one of the three securitisation funds managed by BEST TFI. The fund's profit accounted for over 80% of the BEST Group's comprehensive income in the first three quarters of 2013. To a large extent, it is the effect of the increase in the value of debt portfolios already held by BEST I NSFIZ. “Two factors stand behind the increase. On the one hand, we have improved the effectiveness of our collection efforts, which translated into higher than expected proceeds from the debt recovery. On the other hand, the discount rate applied to valuation of the expected future cash flows has been reduced. It was possible to reduce the rate (known as risk premium) because we eliminated some significant risks associated with taking over the management and debt portfolios of BEST I NSFIZ (now BEST is the sole shareholder of the fund), and also because of the fact that we made an inventory of our debt and implemented an appropriate strategy for handling the same,” explains Krzysztof Borusowski, President.
The operating revenue of the BEST Group for three quarters of 2013 exceeded 104 million PLN, i.e. was about 113% higher than in the corresponding period of 2012. The consolidated net profit attributable to BEST shareholders for the first nine months of 2013 on a compound basis reached 65.2 million PLN compared to 14.2 million PLN in the corresponding period of 2012.