Units of the Bank involved in activity on “Soft collection” stage

Saturday, 29 November 2014 10:12
Units of the Bank involved in activity on “Soft collection” stage

Obligations for detection of any characteristics of outstanding classifying as potential bad and bad loan are imposed on Business units of the branch and Head-Office of the Bank responsible for work with the Customer, about which they are to inform Distressed Assets Recovery Unit. 

If such characteristics are detected by other units of the Bank, they are to inform of it Distressed Assets Recovery Unit.

This information is to be sent within 2 (two) working days after occurrence of such outstanding by an office memo via e-mail of the Bank, to the Distressed Assets Recovery Unit, providing short information of all known facts, circumstances and sources of receiving information (if possible to prove the information documentarily), in particular:

  1. Business unit of the branch and Head-Office of the Bank – information regarding facts of breaching conditions of concluded Contracts and accessory obligations by the Customers bank;  information regarding seizure of accounts of the Customer/Collateral provider/Guarantor; information regarding significant changes in business activity of the Customer/ group to which the Customer relates (stoppage of production or sales, change of owners, change of the structure or work scheme, significant decrease of assets, etc.); information regarding detection of negative data on the Customer/Owners/Factor/Collateral provider concerning seizure of accounts, court proceeding, court enforcement action, initiation of a criminal case, etc., and if communication is lost with them (an owner was changed without agreement with the Bank, the Customer doesn’t provide necessary documents for the Bank), information regarding deterioration of the Customer financial standing, rating decrease, information regarding detection of significant negative changes in the field.  
  2. Credit Administration Unit – information regarding delay in payments; detection of breaching conditions of concluded Contracts and accessory obligations by the Customers bank, especially those that can result in virtues of the Bank to initiate the anticipated loan repayment.  Message is to include information regarding the name of the Customer; code of the Customer requisites and currency of the Contract; list of conditions of the Contract having been breached.
  3. Risk Unit of the Bank/Branch – information regarding detection of facts of breaching conditions of concluded Contracts and accessory obligations by the Customers bank; , an information regarding deterioration of the Customer financial standing, rating decrease; an information regarding significant changes in business activity of the Customer/ group to which the Customer relates (stoppage of production or sales, change of owners, change of the structure or work scheme, significant decrease of assets, etc.); an information regarding detection of significant negative changes in the business line of the Customer
  4. Operational Risk Unit – information regarding detection of negative operational incidents of cases resulted in potential bad or bad loan,
  5. Portfolio Risk Unit – information regarding significant forecasting provisioning by customers bank and branches; an information regarding detection of significant negative changes in field where the Customer works; detection of new companies relating to the Customer.
  6. Security Unit – information regarding seizure of accounts of the Customer/Collateral provider/Guarantor; information regarding significant changes in business activity of the Customer/ group to which the Customer relates (stoppage of production or sales, change of owners, change of the structure or work scheme, significant decrease of assets, etc.); information concerning bankruptcy cases; information regarding breach of integrity  and state of keeping collateral, significant value decrease, insured event, etc.; information regarding detection of negative data on the Customer/Owners/Guarantor/Factor/Collateral provider concerning seizure of accounts, court proceeding, court enforcement action, initiation of a criminal case, etc.;
  7. Legal Unit – information regarding detection of negative data on the Customer/Owners/Guarantor/Factor/Collateral provider concerning seizure of accounts, court proceeding, initiation of bankruptcy case, court enforcement action, initiation of a criminal case, etc., and if the owner was changed without agreement with the Bank, the Customer  doesn’t provide necessary documents for the Bank; introduction of essential legislative changes (restrictions, embargo)  
  8. Collateral Monitoring Unit – information regarding breach of integrity and state of keeping collateral, value decrease, insured event, etc.;
  9. Credit Analysis Unit - an information regarding facts of breaching conditions of concluded Contracts and accessory obligations by the Customers; an information regarding significant changes in business activity of the Customer/ group to which the Customer relates (stoppage of production or sales, change of owners, change of the structure or work scheme, significant decrease of assets, etc.); information regarding deterioration of the Customer financial standing, rating decrease, information regarding detection of significant negative changes in the field where the Customer works, detection of new companies relating to the Customer.

Information is provided on a permanent basis by the mentioned units in each case of detection.  .

Branch manager /head of appropriate unit of the Head Office are responsible for timely and precise information to be provided.

Having received the mentioned information, Distressed Assets Recovery Unit within 3 (three) days finds out the state of the case by phone and, if necessary, sends to appropriate units of the Bank/Branches a request for receiving additional information, initiates priority actions for repayment of debt or leveling negative circumstances.

Units responsible for preparation and providing of information are:

  1. Business Unit of the Bank/Management of the Branch – causes of occurrence of potential bad/ bad loan, explanations of the owners (managers) of the Customer concerning the issue, information of turnover of accounts receivable and accounts payable, goods, detailed description and structure of assets and liabilities, information regarding loans in other banks and their collaterals, terms of the past-due repayment (backed up with reasoning, indicating sources at the expense of which past-due repayment is planned) with copies of all necessary documents.
  2. Risk Unit – forecasts of significant provisioning (conditions, terms and amounts).
  3. Credit Administration Unit – copies of Contracts, collateral agreements, guarantee agreements, abstracts from registers, etc.
  4. Collateral Monitoring Unit – on state of keeping the collateral, providing copies of inspection acts as of the last date.
  5. Security Unit – extended information of the Customer/Owners concerning identification and completeness of the group, availability of relating companies, opened accounts in other Banks, liabilities towards the Creditors, other information (seizures, court proceedings, past-due, etc.).

Answer to the mentioned request is to be provided within 3 (three) days.

After receiving appropriate information, Distressed Assets Recovery Unit studies and analyses the received information, determines priority measures concerning voluntary repayment of the current outstanding.

According to the results of received information, Distressed Assets Recovery Unit prepares conclusion regarding further actions of the Bank towards the Customer and, if necessary, the Bank approves instant measures, having agreed with the Board Member (to which the Unit is directly subordinated)/Bad Loan Committee, determines a mechanism to liquidate negative factors and circumstances and charges appropriate Unit of the Bank/Branch to secure timely fulfillment of provided tasks.

Distressed Assets Recovery Unit controls performing mentioned measures.

Priority tasks on Soft-collection stage is introduction and performance of measures for repaying debt by the Customer in the shortest period of time, without usage of compulsorily debt collection procedure by the Bank, remaining business relations with the Customer and not to do harm his business.     

Measures on regulating issues concerning debt repayment are defined by Distressed Assets Recovery Unit on this stage and are to be performed by appropriate units of the Bank/Branches.

Head of the Business Unit of the Bank/Branch manager are responsible for timely, qualitative and prompt performance of measures on regulating issues concerning debt repayment on this stage.

According to the results of work with potential bad loan on Soft-collection stage, head of the Business Unit of the Bank /Branch manager sends to Distressed Assets Recovery Unit an office memo with a description of conducted negotiations, performed measures, achieved agreements and results while working with bad loan.  Office memo is sent by e-mail within 3 (three) working days after the end of Soft-collection stage.

Collateral Monitoring Unit and Units of the Branch, determined by a supervisor in compliance with internal regulatory documents of the Bank, control keeping of collateralized property on this stage.

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