Standard & Poor's Ratings Services' overall ranking on UniCredit Credit Management Bank SpA (UCCMB) is STRONG as a special servicer of residential and commercial mortgages and of consumer finance in Italy.
The STRONG ranking reflects the following:
- UCCMB's portfolio reached a new peak by the end of 2011, equal to €41.7 billion—up from €38.5 billion at the end of 2010.
- In 2011, UCCMB reported another year of positive collection results both for secured and unsecured loans.
- During 2011, UCCMB set up the Communication and Strategic Marketing unit to increase client and investor outreach.
- UCCMB created a new operative committee called the Permanent Work Group (PWG) to reinforce its risk-management function.
- In 2011, UCCMB expanded its training offer by making new courses available online to all staff, in an ongoing effort to foster relevant professional knowledge.
The outlook is stable for all three rankings. We believe that UCCMB continues to maintain good service standards and operations that are supported by an established IT and risk-control infrastructure.
UCCMB is a special servicer of residential mortgages, commercial mortgages, and consumer loans in Italy.
UCCMB is part of the UniCredit Group (UniCredit), one of the top three Italian banking groups. It serves as the central manager for all nonperforming assets of the parent bank group, but it works also for extra captive clients such as special-purpose entities (SPEs), leasing companies, other commercial banks, and insurance companies.
In 1999, UniCredit Gestione Crediti (UGC; formerly known as Mediovenezie Banca SpA) was established as a special servicer within UniCredit. Being a former commercial bank, it is accredited with a banking license. In 2008, UniCredit merged with Capitalia, a former Italian banking group. As a result, UGC absorbed Capitalia's servicer (Capitalia Service JV S.r.l.) and became UCCMB. By that time, UCCMB started managing the Aspra Finance SpA portfolio, which was a vehicle created to gather all of Capitalia's defaulted loans. In 2011, UCCMB acquired Aspra Finance and today UCCMB fully owns the former Aspra Finance portfolio.
UCCMB was one of the first special servicers in Italy, and it is a well established entity that has been working in the nonperforming loans (NPL) market for more than 10 years. Standard & Poor's has been ranking UCCMB since 2001.
As of December 2011, UCCMB was managing a total portfolio of €41.7 billion. At the beginning of 2012, it was managing 25.1% of the overall Italian NPL portfolio—equivalent to €26.1 billion, compared with €103.9 billion for the overall market. In 2011, UCCMB worked out 35.5% of the overall closures in the system—equivalent to €938 million, versus a market total of €2,639 million. In our opinion, this is evidence of UCCMB's collection ability.
UCCMB's corporate headquarters is in Verona. It hosts all nonoperational departments, from human resources to the back office, and it offers central oversight of all the functions. UCCMB has 22 local offices across all major Italian cities. The network branches are fully focused on asset-recovery processes.
UCCMB also has an office in Munich, Germany, which manages NPLs transferred from organizations in the UniCredit Group. However, these activities are not subject to the rankings we address in this report.
Table 1 shows assets under management up to Dec. 31, 2011.
|Assets Under Management|
|Original gross book value (mil. €)|
|Portfolios||Dec. 31, 2011||Dec. 31, 2010||Nov. 30, 2009||Dec. 31, 2008|
Of the assets under management, approximately 73% by gross book value (GBV) are unsecured, and the remainders are secured assets.
Management And Organization
The subranking for UCCMB's management and organization is STRONG.
Business plan, growth objectives, and strategy
UCCMB's portfolio has grown steadily over the past few years, and reached a new peak by the end of 2011. Its growth was determined by new mandates transferred from UniCredit Group which is one of the largest bank in Italy. Its portfolio is deteriorating as a consequence of the economic crisis and in line with the overall Italian banking system, which has reported a significant increase in NPLs for the past few years. In 2011, UCCMB did not acquire any extra-captive business, despite its intention to expand its extra-captive client base. Nevertheless, we believe this is a relatively minor issue, as the mother company ensures a constant flow of new portfolios.
During 2011, UCCMB successfully incorporated the Aspra Finance portfolio as intended.
Staff grew as planned, to 761 by the end of 2011, from 734 by the end of 2010, along the lines of the portfolio growth.
In 2011, UCCMB was in line with its business plan, both in terms of collection and financial results.
The new business plan has been already approved up to 2015. The general goal is to improve the company's collection ability by implementing several new actions, such as fostering collaboration with the judicial sector. For example, in the past, UCCMB took part with other institutions in the development of an application to speed up the administrative work required to redistribute funds available to the court for reimbursing creditors. Some courts are currently applying this on a trial basis. At the same time, we understand that UCCMB is keen to determine new methodology to assess debtors' ability to repay, and new products to tailor the best solution for each debtor. The business plan specifically sets up goals for each business line (i.e., owned portfolios, captive portfolios, and extra-captive portfolios).
In our opinion, UCCMB has a well structured process in place to approve the business plan, and it has demonstrated its ability to meet its business goals. The focus for the future is concentrated on achieving a higher level of collections. The portfolio is expected to grow as a consequence of UniCredit's NPL growth.
Management and organizational structure
As of Dec. 31, 2011, UCCMB's staff accounted for 761 employees, 27 more than last year. UCCMB is also supported by an external network composed of 1,571 external professionals, such as phone and street collectors paid on commission, and 361 lawyers on its shortlist. External managers have operative responsibilities but they cannot make autonomous decisions on recovery plans or settlement. On the other hand, UCCMB managers have responsibility for monitoring of external managers' collection activity.
UCCMB's business model is based on staff specialization. The Captive department focuses on management of the credits of any entities belonging to the group. The Property department manages the credits owned by the bank. The Special Loans department works on extra-captive loans and loans requiring specific attention. In turn, each department is composed of teams focused on loans differentiated by type and size.
The external network replicates the same structure as UCCMB's business model, so external experts focus on different types of credit.
At the beginning of 2012, UCCMB introduced a few structural changes.
In 2011, UCCMB set up the Communication and Strategic Marketing unit. This is in line with widespread attention that servicers are devoting to client and investor outreach, which has led most of them to reinforce their commercial and marketing functions. In 2011, UCCMB also created the Sportello banking unit and the Workout Banking Coordination.
The monitoring activity of credit risk has been transferred from the Operational and Reputational Risk department to the Credit Risk and Recovery Management department. The latter supports senior management during the purchase of new portfolios and monitors recovery trends to improve the operational activity.
Chart 1 shows UCCMB's management structure as of March 2012.
Staff and training
UCCMB reports a long tenure and experience, both at staff and management level. It is worth mentioning that most of the staff was formerly working in the UniCredit Group and they all have former relevant experience in the sector (see table 2).
|Experience And Tenure|
|Senior||Middle||Special servicing||Property/legal advisory||Senior||Middle||Special servicing||Property/legal advisory|
UCCMB constantly monitors and rationalizes its external supporting network, running several performance metrics. In 2011, the number of debt recovery agencies rose to 122 from 101, along the lines of the portfolio growth. Similarly, external professionals increased by 175, rising to 1,571 from 1,396 registered the previous year. For external lawyers, UCCMB creates a shortlist of top performers, to incentivize them. Lawyers on the shortlist receive a higher volume of business. A fundamental criterion for accredited lawyers is to be able to work online and have IT systems that connect with UCCMB's. The lawyers included on the shortlist increased to 361 in 2011, from 337 in 2010. The company's management team closely monitors the consultants' activity through weekly asset briefings and various other controls built into the asset management system. In our opinion, UCCMB manages external consultants efficiently.
UCCMB is keen to keep its staff and network up to date, providing training programs both for its internal managers and external consultants. Likewise, it aims to keep its workforce highly productive by promoting internal and external incentive schemes.
In 2011, employees completed an average of more than 32.7 hours' training. UCCMB does not require its employees to attend a mandatory level of annual training hours, but the average amount has consistently been more than 20 hours. The induction training program prescribes 13 hours of training courses and more training on the job. In our opinion, this is sufficient, as all new resources are recruited from the UniCredit staff, and therefore they have a good starting knowledge of most important information related to the group culture, general procedures, and banking sector.
The Human Resources (HR) department is in charge of planning the training program for each year, based on management feedback and on the basis of new requirements from legal framework changes. Training can be offered through self-learning systems or by trainers, either external or internal. UCCMB's training system is based on three main pillars:
- Lifelong Learning Centre, which is a series of technical courses;
- UniManagement, which is a series of training for managers; and
- E-Learning TV, which is a new part of UCCMB's training system providing online courses. E-learning TV was launched by HR in 2011. It is a new channel within the internal company's TV.
Once again, in 2011, UCCMB's training sessions were focused on anti-money-laundering and further legal updates. A full online training course was provided to all teams on this subject, as well as a one-day session.
In July 2011, new managers or junior managers received a technical course on credit recovery strategy. The experience was a success and the training was repeated once more during the year and, most likely, it will take place again in 2012.
The company also delivered training to its external network of consultants and lawyers. In 2011, UCCMB repeated its road-shows for consultants in the main Italian cities, and also organized some individual meetings. These road-shows usually focus on the company's strategies and objectives, but also current projects. UCCMB works to reinforce external network knowledge of its processes and technology. Finally, UCCMB organized a helpdesk and training assistance function for its external network within the External Professional Monitoring Unit.
In 2011, UCCMB promoted a new series of videos available on the UCCMB Web TV to circulate important information and foster transparency. Among the videos, there were several messages from the CEO on business strategy and company's goals.
UCCMB has an incentive scheme for internal staff and external professionals.
UCCMB aims to reward its staff based on efficiency, equality, and transparency criteria. Employees' performance is measured on an annual basis taking into account personal, single team, and group results. UCCMB employees are rewarded if their individual achievements are higher than minimum fixed objectives. The company measures performance using a mixture of quantitative and qualitative metrics. It solicits employee feedback in one-on-one quarterly meetings and an annual employee survey. Managerial roles are rewarded in a more subjective scheme, on the basis of outstanding achievements. Overall, UCCMB registered 139 promotions in 2011, and the overall bonus amount was higher than the previous year.
UCCMB remunerates also external consultants mostly on results. The better the results, the more work UCCMB assigns and the higher the probability of receiving a bonus.
In 2011, UCCMB repeated its internal staff survey and reported a 65% response rate, down from 85% the previous year. The survey asked staff to score several factors including professional environment and culture. The breakdown of the results shows positive feedback, with almost all areas scoring higher than the average for the group. However, speed of change and workload is still highlighted as lower than the benchmark. This was the same result as reported for 2011. UCCMB increased its workforce to address this issue, and it hopes that the results of this strategy will be perceived soon.
In our view, UCCMB's training and incentive schemes are appropriate tools to create a widespread working knowledge and preserve staff satisfaction to maintain high productivity and efficiency.
The audit function is outsourced to UniCredit Audit SpA (UCA), which audits all the companies of the group. A complete UCA team of seven staff, including the chief audit executive, is in charge of the UCCMB audit. This team also receives support from other UCA resources to review specific aspects, such as the IT system. UCA applies an internal application, shared with all the subsidiaries of the group, which allows them to automatically manage the audit function and follow-up activity.
The board discusses the audit results on a yearly basis. During the first quarter of the year, the new audit plan is approved by the board of directors. The audit can focus on an entire function, as well as on minor aspects of a process or procedure. Each factor is assessed as critical, non-satisfactory, satisfactory, or good.
In February 2012, the board reviewed 2011 internal audit results. During last year, two assessments were "unsatisfactory" on major functions. The first one referred to inefficiency highlighted in the Logistics department. Several actions were taken, and positive feedback on those remedies has been already released by the audit function. The 2012 audit plan foresees a new assessment of this area to double-check the final results of the correction actions. A further critical point was related to delays recorded in the reconciliation of payments notified by clients (UCCMB does not manage any payments) with the collection activity. Remedies have already been implemented, and the function will be assessed again during 2012 audit plan.
UCCMB is also working on other aspects highlighted by the audit team. As of today, there are several issues still open. A minor portion is overdue, but the audit function constantly monitors the follow-up activity and allows exceptions to the original time schedule if required.
In 2011, the audit team also reviewed nine issues outside of the plan, and verified that the model of management and control related to Law 231/2001.
In principle, UCCMB can also be subject to due diligence from the Bank of Italy, because UCCMB has a banking license. It is subject to Bank of Italy supervision, and a more stringent set of legal requirements than other servicers without a banking license. In practice, it has been very long time since UCCMB received its last review from the central authority.
In our view, the audit process is well established, despite some remedies that were not fully implemented following the original schedule. There is a clear procedure in place to review last year's audit and set up the new plan. A full UCA team is dedicated to UCCMB's audit, and it applies an electronic management system to track the audit activity.
In 2011, UCCMB also obtained the extension of ISO:9001 to two systems: The loan management system and the external legal network.
Risk, compliance, and complaints
UCCMB's compliance function is mainly outsourced and provided by the parent company. The internal Legal & Compliance Unit provides a connection between UCCMB and the group. It uses an internal system to monitor the compliance activity and the flow of main communication and information between UCCMB and the group. UCCMB Legal & Compliance Unit is in charge of reporting quarterly to the board on compliance-related issues and progress.
UCCMB has a department fully dedicated to risk management. The Operational Risk Management unit reports directly to the CEO. Last year, it was organized into three risk management units: Credit Risk Management, Operational and Reputational Risk Management, and Complaints Management. In 2011, the credit risk management was transferred to the Credit Risk and Recovery Management department.
The Operational and Reputational Risk management unit produces regular risk management reports to inform senior management on risk assessment. It provides a monthly analysis of the key risk indicators to the CEO, as well as a quarterly analysis of operational risk showing loss trends, and its classifications based on Basel II regulations. Finally, it is in charge of the Operational Risk Management Report, which is a scenario analysis results report, presented every six months to the board of directors.
UCCMB has had an Operational Risk Management Manual since 2004, which it updates as required. This manual lists 36 numerical risk indicators, up from 30 last year. These indicators are subdivided by area (e.g., loan management, accounting administration, etc.) and are monitored monthly. For indicators falling outside the tolerated variation band, the company prepares an action plan in which it establishes the process owners and mitigating actions.
In 2011, UCCMB created a new operative committee composed of middle managers to support the risk management, called the Permanent Work Group (PWG). Its mission is to actively implement actions to correct policies and processes that the risk committee associates with an increasing risk. The two committees work closely, although the PWG is more operative and the risk committee has an analytical and supervisory role.
UCCMB has a number of systems that it relies on for risk management. These include ARGO (Application for Risk Gauging Online), which is a UniCredit Group system that works out capital risk by collating and analyzing data such as losses and write-offs; KoRI (Key Operational Risk Indicator), which monitors risk indicators monthly to identify the procedures that deviate from preset controls and puts in place relevant actions to mitigate risks; and MEGA, which is software used for mapping business processes.
UCCMB manages complaints through REC, so that the complaints manager can access electronic data about any complaint and manage any activity by updating an electronic form.
We believe that UCCMB has sound policies and procedures to identify operational risk and monitor adherence to internal control mechanisms.
UCCMB states that no material legal suits are pending.
Policies and procedures
UCCMB has previously provided us with a copy of its policies and procedures manual. As of today, policies, procedure, relevant laws, and the manual are available online for all the staff.
UCCMB informs us that it updates the manual on a regular basis. Required adjustments might be determined by a legal change, or to foster efficiency. Every process has an internal resource responsible for it and in charge of checking its efficiency and efficacy every six months. Before any proposal is submitted to the managing director for his approval, it undergoes several assessments by the Risk Management department, the Compliance department, and the Audit function.
UCCMB has adopted UniCredit Global Information Services (UCGSI) as an IT provider, with standard solutions planned and implemented for the group. The internal UCCMB IT team is responsible for liaison with UCGSI.
UCCMB's management system is a loan management platform used by several Italian banks and Italian servicers. It is a Web-based application provided by a third party. It allows management of each credit from boarding until the end of the collection activity. The loan management system allows common loan-management system functions such as filing of credit-related data, archiving of electronic copies of credit documents, workflow to manage internal and external managers, tracking of internal and external communications, checking of resolution approvals, etc. UCCMB's loan management system offers the ability to automatically draft letters or emails. It allows the user to create an internal database of collateral assets backing the credits, and refresh it with information available on central databases. UCCMB's loan management system is linked to UCCMB's accounting systems for general ledger reporting.
The overall UCCMB IT system is completed by other programs and applications that are fully integrated with the loan management system. They support functions like accounting and payment reconciliation.
Two systems are shared directly with UniCredit. ARGO is used to track operational losses. Each subsidiary has to provide information through ARGO so that the mother company can calculate its capital requirements based on the expected losses of the whole group. REC is used to track claims.
UCCMB has reported that all systems are fully integrated. There is a single database of ultimate reference that each system uses as a primary source. This guarantees data accuracy and allows avoiding data corruption.
UCCMB converts all paper documents to an electronic format, with correspondence scanned upon receipt.
In our opinion, the central management system adequately supports daily tasks, while other parts of the integrated system support further functions.
Disaster recovery and business continuity
Since 2007, UCCMB has implemented a central group policy on business continuity (BC), which is in line with the Bank of Italy requirements in terms of operations continuity management. UniCredit's BC policy is based on "British Standard 25999-1:2006 – Business Continuity Management," issued by the British Standards Institution, which is generally acknowledged as the best international practice in terms of business continuity.
UCCMB has a BC committee in charge of managing BC activity. Any update of the current procedure has to be approved by the board, following the committee's proposal. It declares an emergency situation and sets up strategies to manage it. The BC plan sets objectives and procedures to maintain continuity of operations. The Support Emergency Team updates the plan as required.
Disaster recovery is an integral part of the Continued Operations Plan, a document containing the operational measures to respond to and manage crisis situations, and to restore standard operations. The Head of Operational Continuity, who is appointed by the Business Continuity Committee, manages and updates the company's test methodology. This person is also responsible for supporting the Operational Continuity Business Continuity and Crisis Manager in checking and updating the plans.
The offices in Verona, Milan, and Rome act as back-up sites for each other. The distance between Verona and Milan is 200 km, which is further away than we would normally expect to see for a disaster recovery site. There are 11 spare desks available. At the same time, 25 employees can work from home.
All servers for UCCMB are group servers that are based in a remote, Europe-based data center.
The disaster recovery test took place in June 2011, and it took 24 hours to restore data. In November 2011, UCCMB tested the BC site, and 24 hours are necessary to switch it over.
UCCMB has provided us with details of its insurance policies, which appear to be complete and cover all areas of its business.
The subranking for loan administration is STRONG.
Depending on the size of the portfolio, UCCMB enters the case files onto the management system in one of three ways: manually, when there are fewer than 100 case files; by means of "trace files," where there is a reciprocal computerized system between UCCMB and its client; or by nighttime batch data exchange. The Contracts Manager provides oversight during the transfer process. In all cases, UCCMB informs us that it normally loads files within two days.
The loan management system also contains all significant historical documentation and subsequent correspondence, and documents from the servicing process. As soon as the mandate is received, an external company scans all the documentation related to each loan in the portfolio. Scanning the document and uploading onto the systems can take between 15 and 20 days. The loan manager has electronic access to all relevant information. All subsequent correspondence and documents that are generated during the servicing process are scanned and filed in the computerized archives in the loan management system.
Once the case files are in the management system, the DBQ (Data Base Quality) system automatically assesses the quantity of data available for the case against that requested, and attributes a DBQ rating. This rating influences the automatic determination of the assets' expected recovery values.
The data quality check implies that all incomplete files will be put on hold for a certain amount of time to allow the back office to gather the minimum set of required data. Data accuracy is also maintained by the system structure, which prevents the corruption of certain fields and requires a specific procedure to change some other fields.
In 2011, a new process has been created that in our view should help UCCMB to process queries more carefully, and with a higher level of accuracy.
UCCMB does not accept overall debt lower than €500 in its portfolio. This amount should be considered after taking into account all amounts due by a single debtor. Also, the company does not accept files which do not have a minimum set of data. If this is the case, the file is place on standby until it is possible to obtain that information. The file is rejected if it is not possible to gather the minimum set of data.
UCCMB's loan management system allows management of workflows for internal asset managers and external consultants, such as collectors and lawyers. In 2011, the allocation criteria for the external networks were reviewed to guarantee the best workflow decision and guarantee the best collection results. The loan management system's functionality allows changes to workflow criteria quite easily without changing the code of the systems.
UCCMB's loan management system assigns the case to an internal manager and sometimes an external manager, according to predetermined criteria such as geographical area, amount (within pre-established risk brackets), industry segment, and specialism (such as bank, trade, insurance, or arrears). The system can also assign an external lawyer, either at boarding, if necessary, or upon an internal manager's request. In the latter case, the process requires a supervisor's approval, which triggers the automatic workflow to assign the appropriate lawyer from the shortlist. The management system tracks law firm activity. It maintains a full history of legal proceedings, with the external lawyer completing certain data elements directly through secured system access, thus allowing staff to access court documents prepared by external counsel. The system tracks all legal expenses against expected amounts.
The manager automatically receives a message about any new assignment. There is no alert system in place, but middle and senior managers receive daily and monthly checks on the asset managers who did not review their inbox.
After receiving the notification, it is mandatory to start active management of the credit. UCCMB requires the internal manager to provide the first analysis of the file no later than 10 days after the assignment. This first analysis highlights the recovery strategy and the eventual issues and priorities. In 2011, a dynamic business plan model has been introduced to provide more accurate estimates for the business plan program of each credit. The system automatically identifies and sends the proposal to the appropriate approvers, who must review and authorize or reject the plan within three days of receipt, based on a "delegation-of-authority" matrix.
A UCCMB internal manager's work can be supported by external consultants, who are assigned a mandate for a 30- to 60-day period. In the absence of proposals for a loan settlement, at the end of that period, UCCMB's internal manager revokes the mandate and assigns the case to another external consultant, who is automatically chosen by the system. The external consultants manage a maximum of 300 smaller loans with any position not greater than €1,500,000.
Within 60 days of the preliminary analysis, the asset manager must submit either an outline of a settlement proposal, a non-recoverable file declaration, or an outline of the type of legal proceedings required. The supervising manager will then decide which strategy to adopt, or will move the file to another asset manager.
Right after boarding, the computer generates a letter, which UCCMB sends to the debtor inviting the debtor to settle the debt, and providing it with details of the internal manager dealing with its case. This is usually sent out within an average of 20 days from boarding.
During the handling process, the case is subject to continual review, including the ongoing assessment of the possibility of recovery and the time needed. UCCMB gives regular activity reports to the client. The single file can also be associated with an account manager responsible for speaking with the mandating party, while the internal asset manager is in charge of dealing with the originating bank or branch.
We believe UCCMB demonstrates an effective process for allocating asset assignments, preparing resolution plans, and controlling internal approvals.
UCCMB prioritizes all loans based on the likelihood of recovery. UCCMB's asset managers follow standard workflow processes according to the asset type, and this is fully supported by the system. They record all recovery activities and interactions with borrowers and other parties in the management system to facilitate reporting and management controls.
After boarding, UCCMB attempts an out-of-court settlement as the preferred course of action. This involves meetings with the debtor and, where necessary and economically viable, legal action. Other approaches include settlement with recovery by court action and/or bankruptcy proceedings, the sale of the assets, or case closure because the asset is not recoverable. The recovery strategy implies assessing the borrower's personal and real estate assets to explore whether legal action may increase the chances of a positive outcome in any settlement discussions. UCCMB attempts to register mortgages (judicial mortgages) and other liens on assets and property, to increase the probability of recovery and to encourage the debtor to settle.
For unsecured consumer loans, procedures call for frequent telephone contact and, when feasible, face-to-face meetings. For secured loans, the management system tracks changing property values from various market sources, to identify loans whose unpaid balance is higher than the expected recovery from auctioning the property.
If the workout strategy exceeds the expected timelines, the internal manager can decide to change the approach with the consent of the appropriate reporting manager, which varies according to the amount and risk of the loan.
UCCMB achieved more than 86% of collections using the discounted payoff method, in the period from Dec. 31, 2010, to Dec. 31, 2011. It achieved an overall 105.3% ratio of recovery value to net book value—slightly lower than 2010, but still a positive result. The ratios of recovery value to gross book value rose to 65.1% at the end of Dec. 31, 2011, from 61.5% at the end of Dec. 31, 2010.
UCCMB's loan resolution performance is shown in table 3.
|Key Performance Portfolio Statistics|
|Total portfolio||Dec. 31, 2011||Dec. 31, 2010||Dec. 31, 2009||Dec. 31, 2008||Dec. 31, 2007|
|Number of assets||1,001,443||990,553||984,912||961,467||1,112,405|
|Total recovered (€)||1,721,633,777||1,712,638,287||1,511,841,782||1,879,791,542||1,101,093,166|
|Discounted payoff method (%)||76.9||75.1||77.2||82.7||86.7|
|Judicial process (%)||23.1||24.9||22.8||17.3||13.3|
|Number of fully resolved assets||64,004||63,496||66,207||156,922||132,205|
|Legal principal balance (€)||1,724,568,318||1,710,126,051||1,815,746,360||2,999,259,480||1,204,776,959|
|Net book balance (€)||1,065,105,053||975,832,180||990,594,511||1,488,280,945||985,669,433|
|Total net proceeds received (€)||1,121,901,061||1,050,942,676||989,160,089||1,400,523,935||862,721,950|
|Discounted payoff method (€)||965,151,493||895,774,734||827,914,241||1,248,347,030||784,589,682|
|Judicial proceeds (€)||156,749,567||155,167,942||161,245,848||152,176,905||78,132,268|
|Discounted payoff method/net proceeds received (%)||86.0||85.2||83.7||89.1||90.9|
|Judicial process/net proceeds received (%)||14.0||14.8||16.3||10.9||9.1|
UCCMB reports that at the end of 2011, it was managing 25.1% of the overall Italian NPL portfolio—equivalent to €26.1 billion, compared with €103.9 billion for the overall market. In 2011, UCCMB worked out 35.5% of the overall closures of the system—equivalent to €938 million, versus a total of €2,639 million. As reported in table 4, UCCMB reported improving results, both for the secured and unsecured portfolio. During 2011, for all closed positions, UCCMB was able to recover an average of 94.3% of the original business plan on unsecured loans, and 119.6% on secured loans.
|Collections On Unsecured and Secured Closed Positions|
|Total unsecured collections from closed position vs. business plans (net book value) (%)||94.3||97.9||87||83.7|
|Total secured collections from closed position vs. business plans (net book value) (%)||119.6||119||117.8||113.8|
In our opinion, this is mainly driven by the company's proactive approach of expanding the set of products available to distressed debtors. It aims to be as effective as possible in its collection activity by tailoring the recovery plan to different situations and debtors. Chart 2 reports a shortlist of the main products available for out-of-court settlement.
In 2011, the company received the patent for a model developed in-house called ICS—meaning Inserisci (Fill), Calcola (Calculate), and Seleziona (Select). The asset manager has to fill in a standardized form with all of the debtor's relevant and accurate information about income and expenditure habits. ICS automatically calculates the maximum sustainable monthly installments that the debtor can afford, and allows selection of the best recovery plan for the specific situation. UCCMB also updates this on a timely basis with general market data gathered from other external databases (Italian Statistic Agency, regional agencies, the national association of real estate agents, the Ministry of Justice, and a private database, Euler Hermes). As of today, the ICS model is available only for residential mortgages, although the long-term goal is to create a model suitable for every category of credit.
Sale in possession
UCCMB works with UniCredit Credit Management Immobiliare SpA (UCCMI), which provides consultancy and advisory services to UCCMB to facilitate the divestment of property assets, bankruptcy procedures, and sale of the properties (associated with resolved nonperforming positions) by identifying active partners in property brokering.
UCCMI provides property valuation data and assists with the promotion and research of foreclosure auctions to locate potential buyers. Every month, UCCMB transmits to UCCMI some of the positions for which the court-ordered sale of the guarantee property has been fixed. On the basis of the information received, UCCMI performs resale projections and, depending on scenarios of auction prices compared with values, assesses the opportunity for intervention and the quick resale of the property on the market.
UCCMB does not directly manage any payments that are debited to clients' bank accounts. It can access and read them to automatically reconcile the payments with the collections due, and to set the related fees.
UCCMB allows payment online for all captive loans. This method can also be applied for third-party loans, if the client's system is able to support this process.
Payments about intra-enterprise debt (i.e., payments due and unpaid by an enterprise to another as the cost of a service/product received) are notified to UCCMB and they are manually updated. They represent a minor portion of the overall portfolio, and they are the only exceptions of payments not fully processed through an automatic system.
UCCMB generates reports automatically and we understand that these are available within seven days of the interest payment date, or according to the servicing agreement. UCCMB also posts them on its Web site. In our opinion, the quality of the information we have received from UCCMB regarding the actual performance of the underlying portfolios remains satisfactory.
We consider UCCMB's financial position Sufficient.
This is based on UCCMB being owned by, and strategically linked to, UniCredit SpA (BBB+/Negative/A-2).
Related Criteria And Research
- UniCredit SpA, July 23, 2010
- Standard & Poor's Revises Criteria Methodology For Servicer Risk Assessment, May 28, 2009
- Servicer Evaluation Ranking Criteria: U.S., Sept. 21, 2004
- Select Servicer List, published monthly
|Servicer Analysts:||Chiara Sardelli, London (44) 20-7176-3878;|
|Beverley Dunne, London (44) 20-7176-3957;|
|Additional Contact:||Structured Finance Europe;|
No content (including ratings, credit-related analyses and data, valuations, model, software or other application or output therefrom) or any part thereof (Content) may be modified, reverse engineered, reproduced or distributed in any form by any means, or stored in a database or retrieval system, without the prior written permission of Standard & Poor’s Financial Services LLC or its affiliates (collectively, S&P). The Content shall not be used for any unlawful or unauthorized purposes. S&P and any third-party providers, as well as their directors, officers, shareholders, employees or agents (collectively S&P Parties) do not guarantee the accuracy, completeness, timeliness or availability of the Content. S&P Parties are not responsible for any errors or omissions (negligent or otherwise), regardless of the cause, for the results obtained from the use of the Content, or for the security or maintenance of any data input by the user. The Content is provided on an “as is” basis. S&P PARTIES DISCLAIM ANY AND ALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE, FREEDOM FROM BUGS, SOFTWARE ERRORS OR DEFECTS, THAT THE CONTENT’S FUNCTIONING WILL BE UNINTERRUPTED OR THAT THE CONTENT WILL OPERATE WITH ANY SOFTWARE OR HARDWARE CONFIGURATION. In no event shall S&P Parties be liable to any party for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, or losses (including, without limitation, lost income or lost profits and opportunity costs or losses caused by negligence) in connection with any use of the Content even if advised of the possibility of such damages.
Credit-related and other analyses, including ratings, and statements in the Content are statements of opinion as of the date they are expressed and not statements of fact. S&P’s opinions, analyses and rating acknowledgment decisions (described below) are not recommendations to purchase, hold, or sell any securities or to make any investment decisions, and do not address the suitability of any security. S&P assumes no obligation to update the Content following publication in any form or format. The Content should not be relied on and is not a substitute for the skill, judgment and experience of the user, its management, employees, advisors and/or clients when making investment and other business decisions. S&P does not act as a fiduciary or an investment advisor except where registered as such. While S&P has obtained information from sources it believes to be reliable, S&P does not perform an audit and undertakes no duty of due diligence or independent verification of any information it receives. Rating-related publications may be published for a variety of reasons that are not necessarily dependent on action by rating committees, including, but not limited to, the publication of a periodic update on a credit rating and related analyses.
To the extent that regulatory authorities allow a rating agency to acknowledge in one jurisdiction a rating issued in another jurisdiction for certain regulatory purposes, S&P reserves the right to assign, withdraw or suspend such acknowledgment at any time and in its sole discretion. S&P Parties disclaim any duty whatsoever arising out of the assignment, withdrawal or suspension of an acknowledgment as well as any liability for any damage alleged to have been suffered on account thereof.
S&P keeps certain activities of its business units separate from each other in order to preserve the independence and objectivity of their respective activities. As a result, certain business units of S&P may have information that is not available to other S&P business units. S&P has established policies and procedures to maintain the confidentiality of certain non-public information received in connection with each analytical process.
S&P may receive compensation for its ratings and certain analyses, normally from issuers or underwriters of securities or from obligors. S&P reserves the right to disseminate its opinions and analyses. S&P's public ratings and analyses are made available on its Web sites, www.standardandpoors.com (free of charge), and www.ratingsdirect.com and www.globalcreditportal.com (subscription), and may be distributed through other means, including via S&P publications and third-party redistributors. Additional information about our ratings fees is available at www.standardandpoors.com/usratingsfees.
Any Passwords/user IDs issued by S&P to users are single user-dedicated and may ONLY be used by the individual to whom they have been assigned. No sharing of passwords/user IDs and no simultaneous access via the same password/user ID is permitted. To reprint, translate, or use the data or information other than as provided herein, contact S&P Global Ratings, Client Services, 55 Water Street, New York, NY 10041; (1) 212-438-7280 or by e-mail to: firstname.lastname@example.org.