Seller Considerations

Non-performing assets often distract financial institutions from profitable core disciplines. Financial institutions are rarely staffed to provide sustained, senior level attention to non-performing assets. As a result, such assets typically drain resources from revenue generating businesses. Financial institutions therefore achieve the following benefits by selling non-performing assets:

• Reduce Servicing And Loan Surveillance Costs
  Non-performing assets consume significant managerial time, even though specialized collections are not a core discipline. Financial institutions typically improve profitability by restoring focus to client service, loan originations and servicing of performing loans.

• Redeploy Capital Toward The Highest And Best Use
  The sale of non-performing assets replenishes position limit capacities, allowing for the redeployment of capital into revenue producing activities.

• Improve Liquidity And Credit Metrics For Rating Agencies
  Non-performing assets impact regulatory reserve requirements and rating agency metrics, increasing a financial institution’s risk profile and cost of capital. Disposing of non-performing assets is an effective method of improving a firm’s balance sheet and credit profile.

• Reduce Uncertainties Associated With Non-Performing Assets
  Recoveries on non-performing assets are subject to multiple factors outside a financial institution’s control, such as litigation, environmental contamination and bankruptcy proceedings. Selling non-performing assets frees a financial institution from the continuous restatement of reserves and recoveries on the entire firm’s earnings.