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The Spanish and Portuguese NPL Markets Under the Microscope: A Q&A with Debitos, Ahead of SmithNovak’s Conference in Madrid

NPL Market

Following on from their recent Global event in London, SmithNovak is now turning their attention to the Iberian market, with an event in Madrid entitled NPL Iberia 2022.

Brainsre.news, partner of NPL Iberia, met with Günther Haltermann, country director for Iberia at Debitos, to discuss the impact of technology on the market.

Questions and answers were as follows;

To what extent do technological progress and debt management go hand in hand in the field of delinquency?

Haltermann sees technology as a key ally in NPL management processes. “Perhaps the easiest segment to understand is the one related to unsecured debt management, with more granular features and many small ticket sizes to address,” the expert explains.

In this sense, his company has observed how new channels of communication with the client (through means such as instant messaging or chatbots) have been gaining prominence, thus managing more efficiently the resources allocated to portfolio workout. At Debitos, “the same goes for sales processes, where automation is increasingly present and is simplifying the portfolio sales process”.

Debitos believes it can be even one step ahead, with clear examples such as technological integration through APIs in our clients’ management systems. The goal? That they can extract the necessary information for the sale in a faster and more secure way. “It’s another example of how we can do more with less in less time,” says Haltermann.

What is the secondary market and how is it evolving in Spain?

The secondary market is still in its infancy in Spain, and is based on transactions between Investment Funds. Undoubtedly, it is evolving in a positive way and is becoming more and more accepted.

Increasingly, servicers are playing a greater role in the NPL management ecosystem, and additional levers to ordinary management are being considered, such as the sale of segments or debt portfolios to other funds. In a more dynamic industry with more transactions between market players, we will be able to improve quality and information standards, thus reducing the gaps between the seller’s price expectations and the buyers’ offers. At Debitos we offer servicers one more tool to create value for their clients.

In practice, what percentage of companies use this type of service?

As of today, in the still consolidating phase of the secondary market, we observe a greater dynamism among small and medium-sized companies than in larger companies. We understand this trend as a natural step towards the introduction of the new sales channel that transaction platforms represent. But we are definitely here to stay; in fact, the European Commission is working on publishing a “best practice” guideline for the sale of NPLs in the secondary market, which highlights the benefits of transactions platforms, and details how they can help the ecosystem to deconsolidate more debt in less time.

How is a sale process structured by Debitos?

The process is very simple and is oriented so that the debt holders themselves can be in control of the entire process. In five simple steps, the seller will be able to upload all the portfolio information to the dataroom integrated in our Marketplace to go to market. Our support team will be in charge of helping the seller to successfully complete the process and receive the best offers for their portfolios. This is coupled with the fact that we have an extensive investor base (>1,700 investors in Europe) and that we help the seller choose who to offer their portfolio to during the process in order to maximize the chances of closing. All this means that execution times are reduced to a minimum, with very low transaction costs for the seller.

What are the main advantages of using a platform like Debitos for portfolio divestment?

The advantages are clear; full transparency during the process, with our Marketplace being the backbone of the sale ecosystem, significant reduction of entry barriers, giving way to more investors and buyers than usual in the primary market, and better closing prices for the seller due to increased competition and low transaction costs – a key point in medium and small sized portfolios. This is all enhanced by the simplicity of use and security of our system, which also implies a reduction in transaction execution times.

What additional services is Debitos currently implementing?

As part of our scope of services, we are working on several lines to bring even more value to our users. Our latest services include the “Servicer Navigator”, a free tool to help match investors with debt servicers to manage their portfolios once acquired – based on ongoing market knowledge of the services offered – as well as our “Creditor Coordination” service, where we take care of “unlocking” complex multi-creditor restructurings, increasing cooperation and coordinated transactions.

Source: Press release

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