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Non performing exposures: management tools, supervisory profiles and policy goals

Qualitative and Quantitative

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  • General description

    Non-performing exposures (NPEs) keep posing a threat to the stability and economic performance of many financial institutions and European countries. Still, they also represent a significant source of value, when carefully assessed and professionally managed. Expected recoveries can be reliably estimated, and future cash flows sold on the market, providing banks with a source of funding and additional income. Furthermore, de-risking bank balance sheets increases financial resilience and alleviates supervisory concerns.

    Accordingly, policy makers have increasingly focused on NPEs, and an ambitious action plan has been agreed by European authorities, to foster new solutions and tools, while complying with state-aid rules. This course brings together different perspectives, including both policy-related and management-oriented aspects. It guides participants through the subtleties of NPE definition and measurement, illustrates ways of measuring past performance and forecast future cash flows (including those associated with real estate collateral), discusses origination techniques that can be used to orchestrate the sale of NPEs to special vehicles funded by third-party investors. The link between NPEs, profitability and loan supply is critically discussed, to explore the benefits of lower NPE levels for economic growth. Various policy options are presented in detail, including loan sales to private investors and State-sponsored asset management companies.

    The course also reviews supervisory initiatives that have been put forward to ensure that non-performing exposures are promptly recognised, adequately provisioned and managed in a way that is both efficient and sustainable. Finally, it provides a in-depth discussion of the impact of State aid rules on extraordinary schemes aimed at facilitating NPE disposals.

    Tailored sessions will be covered by senior experts from the public and private sector, with extensive experience in NPLs management.

  • Topics covered

    • Non-performing loans: the state of play in Europe
    • Different types and definitions of non-performing loans
    • Estimating recovery rates on non-performing exposures
    • Turning NPLs into cash: an originator’s perspective
    • Dealing with exposures secured by real estate assets
    • The impact of NPLs on bank profitability and loan supply
    • Supervisory initiatives on non-performing loans
    • Asset management companies, NPL sales, provisioning
    • AMCs, State aid and “real economic value”

  • What you will learn

    • You will learn how NPEs and other NPAs are defined and classified in Europe
    • You will be able to master the key variables affecting future recoveries on bank loans
    • You will get a solid understanding of the key success factors behind a loan sale and securitization
    • You will get the whole picture on supervisory initiatives on NPLs and how they should be understood by banks
    • You will be aware of the main policy tools that EU institutions plan to deploy to further address the NPE issue, and how they will interact with State-aid rules

  • How the course will work

    Total course length: 12 hours.

    The course will mix together teaching sessions, where a number of key concepts will be carefully presented and discussed, and presentations by European authorities and policy makers, providing an up-to-date, hands-on approach to market practices, supervisory processes and fundamental rules on NPEs.

    Tailored sessions will be covered by senior experts from the public and private sector, with extensive experience in NPLs management.

    A certificate of attendance will be provided to all participants after the course.

  • Meet the instructors

    Andrea Resti is an associate professor at Bocconi University in Milan. He is an external consultant for Bank Supervision at the European Parliament, independent board member at REV Gestione crediti, and Senior advisor at CRIF, an international group providing credit management solutions. He authored several books on risk management and banking, both in Italian and in English. His main research areas are Credit Risk Management and Measurement, Basel II and the regulation of financial risks, Bank Strategic Management, Quantitative Efficiency Analysis for Banks and multiproduct Organizations. He has been a consultant and economic advisor to the Bank of Italy and to several major commercial banks in Italy. Occasionally, he has acts as an expert on financial crimes on behalf of several large financial institutions and rating agencies, as well as the Italian public prosecutors. He served as the vice-chairperson of the Banking Stakeholder Group at the European Banking Authority.

    Markus Aspegren is an Economist at the European Commission, Directorate General for Financial Stability, Financial Services and Capital Markets Union. He currently works on financial stability issues where he, among other tasks, focuses on the coordination of the Commission’s efforts to tackle non-performing loans. He joined the European Commission in 2012, after having served as Portfolio Manager at BNP Paribas Corporate & Investment Banking, as well as Risk and Solvency Manager in the CFO-office of BNP Paribas Fortis. Prior to this he was an Economist and Policy Advisor at the Ministry of Enterprise in Stockholm, Sweden. He holds an MBA from the Vlerick Business School in Belgium and a Master of Science in Macroeconomics from the Stockholm School of Economics.

    Valentina Borgonovi was born in Florence and graduated with honors from Bocconi University in Milan in business economics. She began her professional career at Deloitte Consulting, where she held positions in the Finance and Risk Department, dealing mainly with securitisation transactions. She subsequently joined UniCredit where she has held multiple positions over the years. In 2010 she took the responsibility of Credit Treasury Risks Controls unit, overseeing structured transactions performed by the Group for principal investments, funding and risks optimization purposes. In 2013, Valentina moved to Group Distressed Asset Management team, responsible for development and execution of strategies regarding the disposal of impaired assets as outright sales or through securitizations and for joint ventures to manage impaired assets under alternative structures. She is now head of Non-Core Business and Portfolio Management structure, responsible for setting the strategies and monitoring the UniCredit Non-Core portfolio rundown.

    Laurence Bogni-Bartholmé is Chief Risk Officer at Lowell Group since September 2017. Previously, she was Head of International Risk Oversight EMEA in the Corporate Risk division at Wells Fargo (2014-2017), where she was responsible for providing independent oversight and credible challenge to strengthen risk management and foundational business practices. Other prior appointments include in senior Risk roles for some of the most respected names in financial services across Europe, including Crédit Agricole (1993-2000). GE Capital, where she held the position of Chief Operating Officer (2009-2013) and Nexans (2014). She is a graduate of the University Paris-Dauphine (UPD), with post-graduate studies at UPD and University Aix en Provence.

    Oleg Shmeljov is a Senior Policy Expert at the Department of Banking Markets, Innovations and Consumers at the European Banking Authority (EBA), where he is primarily involved in the topics of non-performing loans and credit origination. Previously Oleg held the position of Bank Expert in the Oversight Department of the EBA coordinating the work on supervisory convergence, supervisory cooperation, Pillar 2 and supervisory review and evaluation process (SREP) related policy development and assessment. Prior to joining the EBA predecessor, Committee of European Banking Supervisors (CEBS), Oleg worked at the Estonian Financial Supervisory Authority, where he was institutional supervisor for one of the largest banks, and was also involved in the policy development topics in the field of supervisory risk assessment and crisis management. Prior to that, Oleg worked in various risk management roles at SEB Estonia. Oleg holds MSc degree in Economics from Tallinn University of Technology (TalTech).

  • Prerequisites

    BA/MA degree in Economics, Management, Law of Financial Institutions and Markets.

    To fully benefit from the course, participants should have a sound knowledge of some basic financial concepts (net present value, risk premium, internal rate of return) and simple legal aspects (creditors’ waterfall, basic competition rules, foreclosure procedures).

    Technical Prerequisites

    Participants are encouraged to bring their own laptops in order to be able to download and read any additional teaching materials that could be provided by the instructor and by outside experts participating in the course’s facility.

  • Fees

    1750€ – Public Authorities (e.g. National Competent Authorities, Central Banks) and European Institutions

    1900€ – Private Sector

    1000€ – Academics (Assistant, Associate or Full Professors)

    850€ – Students (with certificate of studies)

    The course fee covers coffee and lunch breaks. Travel and hotel costs are not included.


    GROUP DEALS

    • In case of registration of 3 participants from the same organisation, the course fee is waived for one of them.
      To benefit from the deal, the names of the 3 participants have to be communicated to fbf@eui.eu before registering. We cannot communicate the names of other registered people from the same institution (it is upon your responsibility to get in touch with your HR division). A single debit note will be issued for the 3 participants followed by one payment.
    • Special deals apply for larger groups.

    CANCELLATION POLICY

    • In case a course is cancelled, registered participants will receive the full refund.
    • In case a course is moved to another date, registered participants may request a voucher to attend another FBF course.
    • Registered participants who have not yet paid the registration fee can cancel their participation until one month before the start of the course.
    • The registration fee is non-refundable, however it will be possible to transfer registration to another person or request a voucher for another FBF course up to 20 days before the start date of the course.

    For more details, please contact fbf@eui.eu
  • Practical information

    Accommodation 

    Please notice that the course dinner, and most of the social activities, will take place downtown.

    Recommended hotels nearby the EUI:

    Recommended hotels in downtown Florence:

    Suggested restaurants in Florence city centre

    Wi-Fi

    On arrival, participants will be provided with temporary wi-fi access for the whole duration of the course.

    Privacy Notice

    The personal information you have provided will be processed in compliance with the EUI Privacy Statement for conferences. For general queries: fbf@eui.eu

     

    General information on local transport

    From Florence airport:

    Florence airport is located 8 km from the city centre, approximately 30 minutes by taxi or bus. Taxis can be found outside the arrivals terminal; no reservation is needed. A taxi ride from the airport costs about €20 and takes approximately 25/30 minutes.

    A tramway (line T2) connects the airport to the city centre. Trains leave from the airport terminal and take 20 minutes to the main railway station. One-way tickets can be bought from vending machines for €1.50.

    The airport is also connected to the main railway station in Florence by a shuttle bus (‘Vola in bus’) that leaves every 30 minutes (on the hour and on the half-hour) and takes 25 minutes. Tickets are available on board for €6.00.

    From the central railway station:

    Take bus n. 7 at the bus stop Stazione Nazionale in the direction “Fiesole Piazza Mino”, get off at the stop ‘San Domenico 01’. For bus routes and timetables consult the official timetable.

    Bus tickets are sold outside the railway station, at ATAF ticket kiosks and vending machines, tobacconists (tabacchi), newspaper kiosks (edicole), and most cafes (bar). They must be bought before boarding and stamped using the machine on the bus. A ticket costs €1.50 and it is valid for 90 minutes. Bus tickets can be purchased also on board (€ 2.50), but the driver is not obliged to give change.

    Private car

    From the A1 Milano-Napoli (Autostrada del Sole), take the Firenze Sud exit and follow directions to the city centre/Stadio. Follow the directions to the stadium (Stadio), then for Fiesole. San Domenico is on the main road to Fiesole.

    The EUI has several free parking areas available all over the Campus.

  • Course material

    Registered participants can access the course material using the password provided by the FBF secretariat.