Almaty, Kazakhstan, December 13, 2012 - IFC, a member of the World Bank Group, today launched a toolkit on non-performing loans and distressed assets to help improve banks' capacity for managing their troubled assets, supporting improved access to finance for companies in Eastern Europe and Central Asia and contributing to economic recovery.
Following the 2008 global financial crisis and continued turbulence in the eurozone, IFC together with other international financial institutions is helping emerging markets in Europe and Central Asia rekindle growth by supporting private and public sector initiatives, including infrastructure, corporate investment and the financial sector.
The Distressed Asset Transfer Toolkit is a practical guide for financial institutions and potential investors on how to choose the most effective option for disposing troubled assets. It provides critical information on tax and legal implications, and case studies on working with distressed assets in Kazakhstan, Russia and Ukraine. It also provides support to banks on how to maximize distressed asset portfolio value.
"Banks and investors across the region view the disposition of troubled assets unfavorably due to the lack of viable platforms and a transparent process for sales and valuations," said Garth Bedford, Manager for IFC's Financial Market Crisis Response Program in Europe and Central Asia. "We work to develop an enabling environment and promote best practice. Helping banks to clean non-performing loans from their portfolios is crucial for companies and individuals to have access to the finance they need."
Non-performing loans have a dual effect on financial institutions, as there is no income from problematic loans and the capacity of further lending is reduced due to provisioning against them.
IFC launched the Financial Market Crisis Response program in 2009 in partnership with the Development Bank of Austria (OeEB). The program is supporting financial institutions of Europe and Central Asia in recovery from the global economic crisis by helping them improve risk management, and also helping to develop a market for distressed assets.
The program has so far trained 2,550 bankers from 451 financial institutions across Europe and Central Asia, helped enact five amendments to national legislation, and provided in-depth advisory support to 41 banks.