SCI NPL Securitisation Awards: Servicer of the Year

Category: ABS NPLs

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Winner: Intrum

Intrum boasts a presence in 24 European non-performing loan markets and a collection capacity in 160 partner countries, providing it with the broadest geographical reach in the credit management services industry. With revenues amounting to Skr17.8bn in 2021 and around 80,000 clients, the firm is SCI’s Servicer of the Year in recognition of its market-leading business.

“Over the last year, our key priority has been to deliver on our transformation programme to become ONE Intrum and enable further organic growth globally. As a result, standout mergers and acquisitions have recently been less in focus for us on a pan-European level than in previous years. With that said, local portfolio acquisitions are a part of our ongoing business and 2021 was a year with high commercial activity,” observes Alberto Marone, md of Intrum Italy.

In the first quarter of this year, Intrum saw a strong underlying growth trajectory across all segments of its business, with cash revenues up by 10% and cash EBITDA up by 12% versus 1Q21. During the period, the firm signed a transformational partnership with Sainsbury’s Bank in the UK and completed sizeable new deals across multiple geographies, in addition to a large number of important renewals with existing clients.

“In general, we see that an increasing number of clients recognise the benefits of outsourcing the management of late payments and debt collection, so that they can concentrate on their core business. This also proves that our increased focus on customer care, compliance and ethical collection practices is appreciated,” says Marone.

As a full service provider, Intrum offers a complete range of credit management services throughout the value chain, with a strong focus on late payments. At the initial stage of the chain, there are credit information and factoring activities, passing through the invoice and sales ledger phase (with activities including invoicing, white label reminder services and negotiations) to debt collection (including debt restructuring, differentiated collection, payment demands, negotiations, payment plans and follow-up) and finally legal processes and real estate management.

As such, Intrum’s integrated business model interacts with clients to meet their needs at different times. Among the benefits it can offer clients are: acting as a solutions-oriented and flexible partner; the ability to act cross-border; the capacity to take on large strategic projects, including joint ventures; a track record in structuring complex deals and creating value; and financial strength to innovate and provide a better service.

Indeed, Marone believes that Intrum differentiates itself from other servicers in five important ways, the first of which is scale – which creates greater operational efficiencies. The second differentiating factor is diversification, given the firm’s access to multiple asset classes and industry verticals across 24 markets.

The third is its capabilities, with a full service offering across debt servicing and investments. “There is a strong complementarity between Credit Management Services to service and collect debt, thereby receiving commissions, and Principal Investments acquiring debt and real estate-backed portfolios from clients,” notes Marone.

The fourth differentiating factor is the firm’s risk culture, with embedded operating principles and robust processes, including a strong focus on sustainable business practises and ethical treatment of all customers. The fifth is its capital structure, which provides ample liquidity and a low cost of debt.

Looking ahead, Marone anticipates the current macroeconomic uncertainties - combined with rising interest rates and inflation - to lead to rising appetite for consumer credit, which in turn is likely to lead to increased pressures in the credit sector and demand for the firm’s services later this year. “Generally, financial institutions and banks are becoming more and more focused on their core services – which is also driven by regulatory changes - and wish to transfer portions of their activities across the credit value chain to industrial players that can play innovative and complimentary roles, such as Intrum. Overall, the supply of NPL assets has been approaching pre-Covid levels and it is likely that additional supply will be generated by the current challenges,” he concludes.