The KPMG Restructuring practice has supported banks and other major lending institutions in monitoring, assessing and responding to financial decline, stress and distress amongst their borrowing customer base for decades.
The independent business review (below) for lenders and other financial stakeholders is a core part of our service offering and we take pride in rescuing and recovering complex situations, either on an individual basis or across a portfolio, with our Non-Performing Loans (NPL) advisory solutions.
The same analytical skillset is also deployed frequently in assessing the financial covenant and standing of 3rd parties in other situations such as for Pension Trustees when assessing sponsoring employer organisations (also set out below).
Another way this skillset has brought value to clients is in the Corporate community where on an increasingly frequent basis, we are engaged to help strong and stable companies manage supply chain (failure) risk, customer credit (recovery) risk, or assess the financial standing of contractual counter-parties, joint venture partners and other alliances.
In the current COVID-19 environment an increase in corporate failures is widely anticipated and the KPMG Restructuring team is actively engaged in supporting many of our corporate clients in identifying and responding to that risk.
More details on our Risk Management Solutions for companies, lenders, investors and other financial stakeholders is set out below.
With increasingly complex supply chains, regulatory pressures, greater reliance on suppliers and consumer demands for greater transparency and traceability, businesses are beginning to recognise the need to develop a strong grip on Supplier Risk Management. There has been a proliferation of stories around major data loss, operational disruption leading to consumer product shortage, and supplier failure leading to brand damage. In such an environment, effective Supplier Risk Management (SRM) through robust procedures is more important than ever.
The COVID-19 outbreak has served to heighten the existing complex risk profile of the supply chain, but it has also raised the potential for financial failure in other parts of the value chain.
Customer credit risk management has always been a core part of the traditional finance function but when the entire portfolio risk rises, the challenges involved in identifying and responding to specific exposures increases exponentially.
We combine a holistic assessment of potential risks, from strategy and controls to regulation, financial crime and through to remediation.
These risks are often interrelated and so we assess situations in totality rather than isolating specific issues.
Our approach also seeks to:
Market disruption is a constant presence, yet most businesses are not fully prepared for the consequences of a value chain partner becoming insolvent. Initial adversity often masks the opportunity for strategic growth. With appropriate professional insolvency and restructuring advice, you may be able to unlock possibilities for transformational change.
KPMG’s specialist insolvency and restructuring know-how could add significant value, minimising initial loss exposures and maximising any potential medium and longer term opportunity.
|Scenario||Short term / tactical issues||Longer term / strategic potential|
|Critical supplier failure||
|Key customer failure||
Practical implementation support
If you are a lender or an investor to a business that has seen its financial results deteriorate, your own financial risk exposure could start to increase. Understanding the factors driving underperformance can sometimes be challenging, particularly where you do not have direct access to the company’s real time financial data and/or have representation on the Board. Even where you do have access to financial data and perhaps regular dialogue with the company management team, it can still be very difficult to determine whether such factors are likely to continue in the short to medium term.
The implications for your position as a stakeholder to the business could be wide ranging and you will want clarity over such things as:
Our preferred approach at KPMG is to act as a trusted advisor and honest broker between parties in making a robust and independent assessment of the current position and outlook under a range of credible scenarios, before making recommendations that aim to address concerns on all sides.
At KPMG Restructuring we we have been involved in supporting financial stakeholders make this sort of assessment for decades. We are trusted by all of the main UK clearing banks and a variety of other lenders and financial investors.
We have a proven track record of working with banks, borrowers, regulators, NPL portfolio investors and NPL portfolio funders, in capacity as principal and advisor. Find out more about our non-performing loans solutions here.
The Pensions Advisory practice offers independent advice to pension scheme trustees. We deal with a diverse range of stakeholders, including Employers, Shareholders, the Pensions Regulator, the Pension Protection Fund, providers of finance, and all of the main employer covenant advisors. We advise scheme trustees across the full range of situations from regular triennial covenant reviews and ongoing monitoring through to assisting negotiations and implementing complex transitions and restructurings. Find out more about the work we do here.