Home > Risk Consulting > Success Stories > Working Alongside the Multinational Financial Subsidiary of a Major Industrial Company – Part III  
   
 

In 2002 Genesis was called by the new CEO of a subsidiary in an important European country to perform an overall assessment of its lending business. Prior management had left a financial entity with a growing loan portfolio, alarming delinquency rates in portions of that portfolio, and yearly losses of €20 MM.

Our initial analysis identified key areas that needed correction:

An inadequate pricing policy that created a scenario of “adverse selection” where low-quality loans were being added to the portfolio at origination
A reporting system in use that generated lagging indicators of performance, plus a management team that lacked trust in the quality of the information used in reporting, thereby resulting in inconsistent data analysis and reporting metrics
Employees that lacked the skills and knowledge required to effectively manage the business
A “silo mentality” that hindered proper coordination among departments
As a result of poor credit decisions at origination, a collections department overwhelmed by the volume flowing into serious delinquency buckets

Genesis’ assistance to the entity extended for 14 months and included the following areas:

The redesign of the credit evaluation process
The development and implementation of a pro-active portfolio management process
Advice on devising a pricing system toward risk-based pricing
Improvements in the delinquency management, collections, workout and rewrite, repossession and recovery, and litigation processes
Creation of a streamlined credit policy and procedures manual
Company-wide training and development
Supervision in the implementation of recommendations
 
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