Polish debt collection firm Kruk is picking up speed in Spain and has ambitious plans for the future. “At group level we have invested more than €160 million – in the acquisition of non-performing debt (NPL) portfolios – and in Spain, to date, we have invested around €90 million so far this year,” says its general manager in Spain, Alina Giurgea.
Founded in Poland in 1998, the company landed in Spain in 2015 with the integration of the Espand platform. Its total investment in those seven years amounts to 200 million and 45% – that 90 million – corresponds to the acquisition of four debt portfolios of unsecured financial institutions closed precisely this year.
Although each portfolio has a price, depending on its characteristics and risk, the average price on the market tends to oscillate on average between 5 and 15% of the debt acquired, so that the final total exposure acquired is several times the amount paid.
“It marks a new phase of development for us,” she says, convinced that it consolidates the firm’s position as a major player on the board. Giurgea declares herself “very optimistic about the future” and says that “the development we have had so far is even going to accelerate”.
Up to June – when it had invested 55 million euros in three portfolios – its investment represented 30% of the 160 million euros committed by the group as a whole. The firm is active in Poland, where it has its roots and headquarters, Italy, Romania, the Czech Republic, Slovakia and Spain. Its main activity is the purchase of defaulted debt in order to manage the recovery in a negotiated and “friendly” way, but it also has clients to whom it offers the recovery of their defaults.
“The group’s results are very good and we hope to replicate this strategy in Spain,” adds the director of Strategic Transactions and Client Relations at Kruk España, Francisco Álvarez, who assures that the firm is “on the right track” and therefore aspires to work with “the largest consumer financial institutions in the sector”.
“We are optimistic, we are looking at opportunities and we are going to try to close the year with some more investment if possible, logically without going crazy. We are very rational, we always do things very carefully thought out and in progression,” he adds.
The portfolio sales market experienced a notable reactivation in 2021, which has even been boosted this year without any more failures. “It was thought that there was going to be a wave of defaults and we were going to see very adverse effects, but this effect is being delayed and, although it is difficult to predict, we are analysing each portfolio in a very analytical way,” says Giurgea.
“The latest bank NPL ratio published – 3.85% in July, according to Bank of Spain data – is one of the lowest historically for ten or 15 years, which means that a very high level of NPLs is not being generated and we are not seeing it either,” adds Álvarez, although he is convinced that it will come.
“Now, as of today, the macroeconomic reality is that we have 10.5% inflation. That means that those of us who are paid on twelve pay slips are losing one of our monthly salaries. The continued rise in interest rates means an increase of between 100 or 200 euros in variable mortgage payments every month for people who have to pay at some point. The unemployment figures are not positive…. So, at some point it has to come. When? We don’t know,” he adds.
Debt with less seniority
“What we do see is that financial institutions are preparing themselves a bit and the portfolios that are being sold have a different type of seniority, we see portfolios that are a bit fresher. In other words, institutions are tending not to wait so long and to sell portfolios earlier,” says the general manager.
Kruk holds 9% of consumer bad debts
Kruk accounted for 9% of the nominal value of defaulted consumer loans sold in Spain up to June. These figures are included by the group in its financial report where it calculates that operations of this type were placed with a nominal balance of close to 3,000 million and for which 186 million was paid. Those closed by Kruk totalled a nominal value of close to 260 million (not including investments after June). Within the group, it was the unit that invested the most, with 31%, followed by Romania (21%), Poland (18%) and Italy (29%).
Original Story: El Economista | Eva Contreras
Photo: Kruk Twiter
Edition and translation: Prime Yield