The fundamental question posed by this book is why banks fail to maximise distressed loan
collections where the distressed debt investor succeeds? Since the time of the Savings and
Loans Crisis in the United States in the late 1980s, a broad array of very successful investors
have made tremendous fortunes off the loan book losses of banks. How can it be that banks
cannot maximise proceeds of defaulted loan books and portfolios, the same way an investor
who buys those very same loans from the bank can?
The answer to this question is found in examination of the "Bank Arb.Trade" - the ability of
sophisticated investors to uncover value, or arbitrage, in bank loan portfolios that the banks
themselves simply miss or cannot realise. Believed to be the first of its kind, this book builds on twenty years experience of hands-on
asset monetisation, loan portfolio servicing and debt work-out to describe how the wily, deft, vulture investor converts the dredges of
loan defaults into gold.
The work is divided into three parts.The first section analyses how and why banks fail to maximise distressed recoveries.The second
section is a practical, basic training manual; an A to Z "bible" of techniques, systems and processes that will explain to investors or
lenders how to go about earning back their losses and in many cases, clearing amounts greater than par.The final section analyses
lessons from previous crises and proposes how in the future we can improve the way we do things.
The book is intended to be used by bank executives and officers, their advisors, loan servicers, investors, and government sponsored
entities as a working tool to assist them in retaining these rewards for themselves. Accountants, administrators, and rating agencies
should find this book to be an extremely useful source of reference, whilst regulators, academics and students may also find it will
better their understanding of the secretive distressed debt industry and therefore the financial system.
Preface Acknowledgements Introduction Part 1: The Distressed Debt Problem 1. How Distressed Debt Escalates out of Control 2. Why Banks Fail to Maximise Distressed Collections Part 2: Distressed Debt Solutions 3. Structure 3.1 Response to Crisis 3.2 Internal Work-out 3.3 Bad Banks 3.4 Special Servicers 4. Preparation and Planning 4.1 Core Concepts and Components 4.2 Resources for Different Loan Types 4.3 Preparing the Groundwork for Resolutions 4.4 Optimising Collection Distribution 5. Asset Management 5.1 Skill Sets for Distressed Asset Managers 5.2 Managing Asset Managers 5.3 Controlling the Resolution Process 5.4 The Asset Manager Toolkit 5.5 Measuring Asset Manager Performance 5.6 Selling Off Loan Books 6. Borrowers 6.1 Dealing with Defaulted Borrowers 6.2 Refinancing and Restructuring 7. Collateral 7.1 Credit Bidding 7.2 Real Estate Valuation- Making Appraisals Work 7.3 Real Estate Development- Credit Blind Spot 7.4 Real Estate Market Recovery Part 3: Past Lessons, Future Improvements 8. Lessons from Previous Crises 9. Current Developments 10. How can we Improve Things?
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