Summit Notebook

Debt collecting gets…er, sexy?

Bank employees working in call centers and reminding clients of their overdue loans used to be as far to the bottom of the banking food chain as you could be. Not any more.

Raiffeisen International, the second-biggest lender in eastern Europe, has ramped up staff in its collections and risk management departments.

Active in 17 countries between the Czech Republic and Kazakhstan, it is exposed to a region that is among the hardest hit by the global financial crisis. Rampant loan growth of the last few years has turned into an equally rapid rise of bad debt.

“We substantially increased resources in our call centres, started new ones,“ Martin Gruell, Raiffeisen’s CFO, said ahead of the Reuters Central European Investment Summit in Vienna. “There are 40 percent more employees working in Collections than before the crisis.”

As it is struggling with the rising tide of non-performing loans – they more than doubled in the first half of the year – it has also shifted part of its pool for bonuses to those who are working on saving as much as possible of loans that have become overdue.

“Employees have targets and are getting bonuses depending on how much they are able to collect,” he said. Do they come at someone else’s expense? “Obviously, if there is not such a high demand on our salespeople, bonuses will be lower there.”

And Raiffeisen is feeling that its competitors are doing the same.

from Funds Hub:

The morgue after Christmas

He said at the Reuters Restructuring Summit in London that by the end of the year banks will issue "in patient", "out patient" or "morgue" judgements as they go about the business to decide who gets much needed loans and who does not.

from Changing China:

Don’t bank on mortgage spike

By Michael Wei

Don't count on a recent spike in home loans to greatly improve earnings at Chinese banks. That's because they are still a relatively small part of overall lending.

"It is not expected to have a huge impact on banks' overall earnings," Gao Shanwen, Essence Securities' chief economist said at the Reuters China Investment Summit, speaking about the rise in mortgage lending. Mortages make up only about 10 percent of total lending at present.

New lending in China has surged in recent months, and some of that has gone into the recovering housing market. Mortgages are considered quality loans in China because of their longer term and relatively higher margins.

Gao said that such loans are one of the key areas that commercial banks have been pushing during a lending surge in the first half of the year under a loose monetary policy.

Photo Caption: Gao Shanwen, chief economist at Essence Securities, attends the Reuters China Investment Summit in Beijing. REUTERS/Christina Hu