BAMC's strategic goals
Mission of BAMC as defined in the Guidelines
BAMC's mission is defined in the Guidelines and the Board of BAMC has in line with the mission adopted BAMC's Key Objectives and Strategic Goals
- Implement the measures to strengthen the stability of banks, adopted by the Government of the Republic of Slovenia.
- Promote trust in the financial system and operate by the rules of the business-financial profession and the highest ethical management standards, avoiding any conflict of interest.
- Implement a proactive, cooperative and holistic approach to the restructuring of companies.
- Being an active asset owner.
- Manage the assets in a way that would allow exiting at the best possible price.
Key objectives and strategic goals of BAMC
- BAMC's financial goal is to maximize the return to state and ultimately to the taxpayer and in this respect: (1) redeem the state guaranteed bonds issued to pay for the transferred assets, and (2) in addition, generate the required return on the initially invested equity by the Republic of Slovenia.
- Consistent with the previous objective, act in the way which will aim to restructure companies when economically justifiable and to contribute to a renewal of sustainable activities in the property and other asset markets in Slovenia.
- Manage assets intensively and invest in them so as to optimise their income-producing potential and disposal value
For effective monitoring and reporting, the Government and BAMC have defined a set of Key Performance Indicators, so-called KPIs. These KPIs provide a starting point for BAMC's strategic and financial planning.
Strategies to achieve goals
All BAMC's activities are ultimately performed to adding value to the Republic of Slovenia. The framework below is a guide to the following description of BAMC's strategies and strategic actions.
The steps and their value adding strategies are further described below.
Strategies to add value to managed assets
|Overall imperatives||BAMC aims to become a Non-Performing Asset Manager of international standing, having a market value that exceeds the value of its assets.|
|||Acceleration of restructuring and transformation from predominantly being a claim manager to becoming an asset manager.|
|||Value maximising, un-biased, fact-based case strategies and action planning and transparent, professional decision-making.|
|||Asset management with the recognition of BAMC as only a temporary owner - ensuring BAMC's assets are marketable at all the time.|
|||Competitive, professional and transparent exiting processes.|
|Imperatives for Management of Restructuring & Majority equity stakes||BAMC maximizes the value of its claims by restructuring the debtors where this strategy is economically justified.|
|||BAMC aims to keep control over the debtor's cash flow in cases where BAMC is the economic owner.|
|||BAMC is maximizing enterprise value (meaning debt and equity together) of restructuring cases.|
|||BAMC will provide liquidity to restructuring cases where it is commercially justifiable|
|||BAMC will initiate, assist and monitor operating restructuring of debtors (corporates).|
|||BAMC will complement individual case strategies by bundling assets into portfolios.|
|Imperatives for Management of Recovery situations||In cases where BAMC determines that the debtor as a going concern is no longer viable, and where no commercially (and legally) acceptable offer for BAMC's exposure is available, BAMC will initiate bankruptcy proceedings against the debtor.|
|||BAMC will decide for the disposal of operating companies' assets where taking control over the company is not prudent or even possible.|
|Imperatives for Management of Minority non-strategic equity stakes||BAMC will strive to find a transparent and optimal exit for each directly owned minority shareholding.|
|Imperatives for Management of Real estate||BAMC will take over collateralised real estate where economically justifiable.|
|||BAMC will ensure value protection and value enhancement through facility management.|
|||BAMC will add value to its real estate through a wide range of marketing activities.|
|||BAMC will not be a real estate developer.|
|||BAMC will use rental options to optimise the combined yield and exit value from real estate.|
|||If deemed advantageous, BAMC will create real estate portfolios with distinct risk & return profiles.|
|||BAMC's real estate management will apply also to real estate collateralised to BAMC but still in bankruptcy processes where appropriate, e.g. by seeking to ensuring optimal selling techniques and processes are carried out in the bankruptcy procedures.|
BAMC aims to become a Non-Performing Asset Manager of international standing, having a market value that exceeds the value of its assets
In the two years since its establishment, BAMC has put in place an effective management mechanism not just for non-performing loans but also for other types of non-performing assets that are a burden on the banks' balance sheets. BAMC has:
- Qualified expert managers of non-performing loans, equity and real estate,
- Established processes for effective management of non-performing assets,
- The necessary restructuring competences (financial and operational) to take on and successfully resolve complex case situations
The processes are easily scalable and supported effectively, partly by in-house and partly by outsourced solutions.
However, BAMC has the ambition to become an organisation with operations that have a value exceeding the value of its assets. This should provide the owner, the Government of the Republic of Slovenia, with the flexibility to utilise BAMC for further non-performing loan resolution.
BAMC intends to be the best choice of manager (integrator) for the remaining synergistic, non-performing assets left in the balance sheets of the banks in the Republic of Slovenia and their subsidiaries in the Republic of Slovenia and abroad. Transferring additional non-performing assets to BAMC could in many cases create positive synergies. Furthermore, economies of scale could potentially improve the cost efficiency of the asset management process.
BAMC has recently been asked to make preparations for potentially merging in, or taking over assets from, Factor banka and Probanka. The consequences of these potential transactions are not included in this planning document.
With a fully functioning organisation, robust management and decision processes, full understanding of its assets, clearly defined value creation strategies and a track record of solid results, BAMC will become an entity that has a value that exceeds the sum of its assets. At this point, BAMC will be attractive for investors. This will give the Government improved optionality to further un-burden itself from the consequences of the banking crisis, should it so desire.
Acceleration of restructuring and transformation from predominantly being a claim manager to becoming an asset manager
Current focus is to ensure accelerated restructuring of BAMC's exposures in the corporations that are going-concerns and are deemed to be commercially viable if successfully restructured. In February 2015, BAMC had signed agreements on the financial restructuring in half of its portfolio of restructuring cases. During 2015 and 2016, BAMC will have to successfully restructure its entire portfolio. A continued reorganisation of BAMC's cases, such as case manager specialisation and creation of portfolios of similar assets, is planned and will be executed on. This will ensure that necessary resources and focus are allocated to each restructuring case.
In the second half of BAMC's lifetime, i.e. after 2017, the structure of BAMC's assets will change. The share of claims against debtors subject to restructuring will decrease, the share of claims against debtors undergoing bankruptcy proceedings will remain significant and the share of real estate which BAMC will take over as a direct owner will increase.
Depending on the changes in the share of specific types of assets in its portfolio, BAMC will further adapt its organizational structure and processes. The details of how the staff structure and IT architecture is expected to change over time are presented in the "Organizational strategies" chapter.
Value maximising, un-biased, fact-based case strategies and action planning and transparent, professional decision-making
Following the acquisition of an asset, typically a loan, BAMC performed a detailed analysis, initially for the exposure to a specific company and then for the exposure to an entire business group, if the exposure belongs to such a group. The analysis includes:
- an assessment of the debtor's ability to repay liabilities over the medium-and long term from cash flows or divestment opportunities,
- the legal framework that would facilitate the maximum repayment of a claim,
- the debtor's willingness to search for a mutually acceptable solution, and
- other circumstances that may affect the repayment of BAMC's claim.
Based on the analysis, an internal asset valuation is preformed, which provides the basis for the selection of a relevant asset management strategy for the acquired assets. BAMC selects either a restructuring strategy or a recovery strategy.
BAMC opts for a restructuring strategy whenever it assesses that financial and operational restructuring measures will improve a debtor's operations to such an extent that it will achieve a higher rate of repayment than if it recovered debt from the debtor through the liquidation of pledged collateral. BAMC's objective in the restructuring of a company is to ensure the long-term efficiency and viability of the debtor's operations and its competitiveness, and to maximise the repayment of debt with cash flows from operations. Therefore, financial restructuring is also linked to business or operational restructuring, which may involve the sale of the company's obsolete assets and/or lines of business.
In case of loss-making companies against which BAMC holds claims, when it is clear that it would be impossible to create greater value through financial and operational restructuring than through recovery of collateral, BAMC's actions as a prudent and diligent manager dictate that it opts for the recovery strategy. A recovery strategy is also used in the case of companies against which bankruptcy proceedings had already been initiated before their transfer to BAMC. It has to be noted that this was the case in a substantial number of companies transferred (more than half of recovery classified cases).
BAMC will continue to invest in its decision-making processes to further ensure their robustness, transparency and effectiveness by selective introduction of IT-solution support. This is further described in the Organisational Strategies chapter.
Asset management with the recognition of BAMC as only a temporary owner - ensuring BAMC's assets are marketable at all the time
Based on its mission outlined in the ZUKSB, BAMC is a project company whose purpose is to ultimately sell all the assets that were transferred to it. In the ZUKSB, BAMC is required to sell at least 10% of its assets under management each year.
BAMC is prepared to sell any asset as soon as BAMC has a substantiated bid from an eligible acquirer that is exceeding the estimated value of the asset that BAMC believes it can generate from the asset through continued ownership. Any sales will be executed on in a competitive and transparent sale procedure. To support the decision-making, BAMC will perform regular valuations of all its assets using an internal valuation method, attested to and approved by external experts and auditors.