Enhancement of NPLs: a process to be outsourced

nplDuring our daily activity, we get in touch with (almost) all the major realities of non-performing loans. The network includes credit institutions as well as the credit management services, i.e. the credit creators, managers and second- or third-hand buyer.

In spite of the lack of uniformity, almost all the industry players tend to enhance non-performing loans in-house.

In the few outsourcing cases, the initiative is left to the professionals; basically, the result thus obtained is directly proportional to the initiative of the external consultants.

Moreover, the outsourcing is mostly entrusted to professionals who generally pursue other professions, for example they are lawyers, accountants and realtors. These professionals tend to stand out in their respective fields, while leaving aside the tasks beyond their competences.

Enhancement is intended as an integrated process where loans and assets used as guarantees are given the same attention, and the judicial, extrajudicial, accounting, technical and professional activities all culminate in a dynamic assessment, constantly updated and specifically oriented towards results.

Based on these assumptions, there is little sense in internalising a process by entrusting it to a team of professionals who do not have all the required skills, or in outsourcing it to professionals who will tend to carry out only some parts of this process.

The most modern and effective solution is to assign the enhancement of NPLs to structures able to gather all the activities in a single system constantly shared with the creditor, who can easily monitor the compliance with the process standards and the achievement of the expected results. Thus the original structure of the creditor is neither replaced nor depreciated, but rather integrated into a more efficient process where each professional is free to expresses their skills and competence.

Emanuele Grassi