KPMG has significant experience of debt restructuring engagements in Ukraine today. We provide financial advisory services for many of the major debt restructuring projects in Ukraine, involving billions of dollars’ worth of debt, and also work on smaller projects.
We have deep knowledge of the specific aspects of working with major international and Ukrainian banks, including state banks, and we understand their requirements and expectations in the restructuring process.
Our work has earned us an excellent reputation among the biggest international banks.
Independent Financial Analysis
What’s on your mind?
- The borrower’s financial position has recently significantly deteriorated.
- Scheduled interest and principal repayments exceed the cash flows generated by the borrower’s business.
- The borrower breaches the financial covenants or is expected to breach them in the near future.
- The borrower’s integrity is unclear.
- Why has the borrower’s financial position deteriorated?
- Are any funds being channelled out of the business?
- How robust are the borrower’s forecasts?
- Which factors affecting cash flows are under the borrower’s control, and which are not?
- Can the loan be refinanced?
- Can the security be foreclosed?
- Can the debt be converted to equity in the company?
- Can the debt be sold?
- What realistic debt servicing and repayment arrangements may be adopted given the borrower’s current financial position and forecasts for the future?
Organization of the Internal Debt Management Function
What’s on your mind?
- The borrower only recognizes that it is a distressed company late in the day
- The system of early warning signals that a borrower might become a distressed company is ineffective
- The strategy for work with borrowers does not include a restructuring stage: the borrower is either considered a standard borrower or is immediately classified within the debt recovery pile
- The functionality of the debt management division is confined to legal procedures, while the out-of-court settlement procedure is not applied extensively
- There is no methodology for assessing the financial position of „distressed borrowers“ and constructing a respective cash flow forecast. Meanwhile it transpires that the assessment methodology applied to standard borrowers is unsound
- The process for work with restructured loans during restructuring and after the recovery of solvency is set up ineffectively
- The KPI system of the debt management division is ineffective
- How do you set up the early monitoring system to promptly identify potential non-performing loans and facilitate the proactive adoption of measures aimed at the strengthening of the bank’s position, the recovery of debt or restructuring?
- Why are the regular client risk assessment division and business unit ineffective in their work with borrowers that find themselves in dire financial straits?
- How do you avoid starting the debt recovery procedure too late or too early?
- How do you enhance the effectiveness of work with bad debt?
- How do you avoid duplicating the functionality of the debt management division with other divisions of the bank?
Management of Non-performing Loan Portfolios
What’s on your mind?
- The quality of your bank’s loan portfolio has recently deteriorated significantly.
- You have the required liquidity reserves and want to acquire a number of problem loan portfolios, but have doubts about their actual quality.
- How can the risks associated with your existing problem loan portfolios be mitigated?
- Can the problem loan portfolios be sold?
- What is the actual value of the problem loan portfolios you plan to acquire?
- What is the optimal loan portfolio sale/acquisition transaction structure?
How KPMG can help?
- We perform a comprehensive analysis of the problem loan portfolios, determining their quality and actual value.
- We develop a financial modelling tool to analyse the bank’s business operations.
- We assist in setting up, or improving the performance of your workout unit.
- We provide consultation on transferring problem loans to a specialised problem asset management company.
- We provide assistance in the acquisition/sale of loan portfolios, including assessing the indicative reserves, structuring the transaction, analysis of the tax aspects, auditing the loan pool, etc.