OTS Maribor - KURT LEUTGEB

Policies and Procedures

for Collaterals

Results of the survey among members of AECM

Operational Training Session (OTS)

Maribor/ Slovenia on 16 and 17 April 2015

Kurt Leutgeb - aws

Survey

2

Sample: 19 questionnaires

answered by: aws/Austria

NÖBEG/ Austria

PMV - Waarborgregeling - Flemish guarantee fund/ Belgium

Sowalfin/ Belgium

Guarantee Fund of the Republic of Srpska/ Bosnia and Herzegovina

HAMAG-BICRO/ Croatia

CMZRB - Czech-Moravian Guarantee and Development Bank/ Czech Republic

BPI France/ France

Verband Deutscher Bürgschaftsbanken e.V./ Germany (two)

AVHGA - Rural Credit Guarantee Foundation/ Hungary

Garantiqa Hitelgarancia Zrt./ Hungary

Garfondas - Agricultural Credit Guarantee Fund/ Lithuania

INVEGA UAB - Investiciju ir verslo Garantijos/ Lithuania

BGK Bank Gospodarstwa Krajowego/ Poland

SPGM - Sociedade de investimento/ Portugal

SEF - Slovene Enterprise Fund/ Slovenia

CESGAR - Confederation of Spanish Mutual Guarantee Societies/ Spain

Teskomb/ Turkey

KREDEX/ Estonia

1. Policy regarding collaterals

0

2

4

6

8

10

12

14

16

Personalguarantee

Mortage Retention of title,reservation of

proprietary rights

Pledge ofinsurances,

securities, depots

Assignement /cession ofreceivables

never sometimes often in every case

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1.1. Types of collaterals used by your institution?


4

1.2. What are the main reasons for you as a guarantee institution to ask for

collaterals?

2

5

6

13

13

18

0 2 4 6 8 10 12 14 16 18 20

to compensate for an intransparent ownershipstructure or a strong dependence

legal or regulatory reasons

banks requirements

to share the risk between bank, entrepreneursand the guarantee institution

to strengthen the identification of theentrepreneurs with the company

to reduce risk

Additional remarks:

To reduce the risk of fraud or illegal act

Some never ask for collaterals (eg. Waarborgbeheer nv)


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1.3. Do you have any minimum collateral requirements (that have to be fulfilled

before granting a guarantee)?

8

12

0 2 4 6 8 10 12 14

yes

no

Additional remarks:

Examples for minimum collateral requirements:

Personal guarantees (sometimes depending on the equity already invested), third

party personal guarantees, bills of exchange, mortgage

If bank uses collaterals some members reduce their risk amount

Some require minimum values (30 %), depending on rating and on loan amount

SEF: Collateral has to be higher than loan amount, changes in 2015

(1:0.8 + guarantees)

Depending on type of loan


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1.4. Do you offer a collateral waiver, i.e. do you explicitly refuse collaterals?

16

4

0 2 4 6 8 10 12 14 16 18

yes

no

Additional remarks:

for smaller loan amounts only

BPI has other aims than a commercial bank (limits collaterals, eg. no seize

through mortgages on the personal home of the entrepreneur even if there

is a personal guarantee)


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1.5. Is there a necessity to have collateral besides/ in addition to your

guarantee?

8

11

0 2 4 6 8 10 12

yes

no

Additional remarks:

Sometimes the bank can ask for collaterals for its own risk share

Often: Personal guarantee


8

1.6. Do you take collateral only out of the project you finance (e.g. mortgage on

the land financed) or also in addition (e.g. mortgage on the private real

estate of the entrepreneur)?

7

13

0 2 4 6 8 10 12 14

yes

no


9

1.7. Is the bank allowed to take extra collateral on its risk share or is there

a pari passu stipulation in every case?

11

9

0 2 4 6 8 10 12

yes

no (always pari passu)


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1.8. What is the average ratio between credit and requested SME collateral

(e.g. 100 unit of credit / 200 units of collateral, ratio = 1:2)

Answers:

very different!

sometimes no collateral,

sometimes no specific ratios (depends on the bank)

sometimes ratios like

2:1 (Hungary)

1:1 (Portugal, Lithuania, Estonia)

1:1 in addition to SEFs guarantee (Slovenia)

1:2 (Turkey)

1:2,5 (Croatia)

1:3 (Bosnia)


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1.9. Personal Guarantees (if used)

1.9.1. Do you have limits for the nominal amount/percentage of a personal

guarantee?

16

4

0 2 4 6 8 10 12 14 16 18

yes

no

Additional remarks:

Limit is the amount of the guarantee/ loan

EUR 250.000

50 % of the outstanding loan amount


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1.9. Personal Guarantees (if used)

1.9.2. Do you have a fixed stipulation when personal guarantees have to

be given?

16

3

0 2 4 6 8 10 12 14 16 18

yes

no

Additional remarks:

All shareholders holding 20 % or more

Depending on the project (common for start-ups)

„better“ projects (eg. more innovative projects) lead to limited stipulations

2. Procedures regarding collaterals

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2.1. How do you administer collaterals

2

7

14

0 5 10 15

other

on your own

collaterals are always administered by the bankgranting the loan


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2.2. How do you assess collaterals?

2

2

6

7

14

0 5 10 15

no assessment of the value of collaterals ismade

by own experts of the guarantee institutions

by independent experts from outside

by internal standardized assessment rules

by relying on the figures indicated by thebank granting the loan


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2.3. What is the recovery rate out of collaterals in relation to your guarantee

defaults?

Answers:

the answer is very often around 5 %

some indicated 10-20 %

some indicated 50 %


16

2.4. How long does it usually take to recover the amount of defaulted

transaction in months (the length of recovery process)?

Answers:

varies strongly (depending on the single case): 6

1 to 2 years: 6

more than 2 years: 4

3-5 years: 2


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2.5. Is the recovery process dealt with in-house or is it outsourced?

Answers:

Bank or outsourced: 10

Inhouse: 8

Both: 2


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2.6. At what time of the recovery process do you get reimbursed?

2

6

13

0 5 10 15

Prior to the bank

After the Bank has covered its loss

Pari passu


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2.7. How often do you reject or reduce the guarantee payment because of

administrative mistakes by banks regarding collaterals

Answers:

Never: 6

% of all guarantee payments demanded are rejected:

10 %: 2

2 to 6 %: 7

below 2 %: 3

% of all guarantee payments demanded are reduced:

10 %: 1

2 to 6 %: 4

below 2 %: 2

3. Additional remarks, feedback

or special interest in relation to

guarantees not covered in the questions

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annual data on fees and recovery collected from collateral would be

interesting

statistics on the evolution of the recovery rate on defaults obtained from

collaterals

are there special programs for zero collateral loans (programme by BPI)

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Thank you for your kind attention!

OTS Maribor - KURT LEUTGEB

Economy & Finance

Transcript of OTS Maribor - KURT LEUTGEB