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Alternative lending and services

Alternative financial services compensate banks retreat. What can you do?

  • What alter­na­ti­ves finan­ci­al ser­vices exist to arran­ge finan­cing, grow and pro­tect wealth, invest in or sell a com­pa­ny, or save on other ser­vices?
  • What can you do now to get your business financed?

  • You can make sure that your busi­ness is among tho­se inves­tors and len­ders judge worthwhile. And you can approach alter­na­ti­ve sources.
  • You can do more yours­elf or hire some­bo­dy to do it for you. Doing it yours­elf is what lar­ge cor­po­ra­ti­ons and fami­ly offices gene­ral­ly do and keeps you in full con­trol.
  • Pre­sent your case the best way. If your case is fit­ting in len­ders wis­hes, your good CFO and trea­su­ry might get bet­ter terms than in the past.
  • Howe­ver, if you do not need such capa­bi­li­ties on a recur­rent basis, you might not haven such full-time func­tions in-hou­se, but you can talk to us.
  • How can you have your assets and liabilities correctly managed?

  • Pay an advi­ser for the ser­vices you were used to recei­ve from the bank. It might save you money and pro­vi­de you a not con­flic­ted result. You pro­bab­ly have been pay­ing for bank advice any­way through expen­si­ve pro­ducts, cus­to­dy fees, exchan­ge rates, etc. We are con­fi­dent that we’ll find poten­ti­al.
  • Plan for the lon­ger term than the time hori­zon of banks sale­speop­le. Think about and your suc­ces­si­on, wealth pre­ser­va­ti­on wit­hin the fami­ly, invest­ments or sale of the com­pa­ny or spe­ci­fic major assets and pro­per­ties. Such events should be pre­pa­red for long ahead.
  • How can you take advantage of rising opportunities

  • Crowd­fun­ding, peer-to peer len­ding, tra­di­tio­nal and alter­na­ti­ve debt pro­vi­ders, payment ser­vices, bro­kers and all kind of Fin­tech plat­forms are gro­wing.
  • Howe­ver, if you are not only buy­ing ser­vices but asking for money, make yours­elf and your case attrac­tive for the coun­ter­part, make your finan­ci­als under­stan­d­a­ble and watch your rating.
  • You can easi­ly save money on smal­ler oppor­tu­nities such as for­eign exchan­ge or stock broo­king. As an examp­le: a dif­fe­rence bet­ween bid and ask of bank cur­r­en­cy exchan­ge rates 1-7%, depen­ding from amounts and cur­r­en­cy pairs, means 0.5 – 3.5% mar­gin on inter-bank rates. You, or we for sure can defi­ni­te­ly get bet­ter than that.
  • Mer­gers and Acqui­si­ti­on are beco­m­ing more dyna­mic also in the lower seg­ment. Rise and con­so­li­da­ti­on of plat­forms allow an ever fas­ter and broa­der reach to Inves­tors. Talk to us if you want to get ready for such tran­sac­tions.

Less lending and service from Banks?

Less lending and service from banks?

Banks reduce SMEs lending services. What is happening?

  • Len­ding to non-finan­ci­al cor­po­ra­ti­ons in Euro­pe is decli­ning sin­ce years while much funds are idle and cen­tral banks’ inte­rests low. Banks redu­ce SMEs len­ding ser­vices espe­ci­al­ly in the stres­sed Euro peri­phe­ry with con­se­quen­ces.

  • Qui­te some banks are suf­fe­ring for ear­lier errors of len­ding, which in hind­sight has pro­ved incon­s­i­de­ra­te. Banks equi­ty and Total Loss-Absor­bing Capa­ci­ty has often fal­len below the level nee­ded to absorb poten­ti­al los­ses on exis­ting assets. This makes it pro­hi­bi­ti­ve to extend addi­tio­nal loans. Regu­la­ti­ons con­se­quent­ly beco­me stric­ter and more com­pli­ca­ted. Risk awa­re­ness of bank offi­cers and use of risk manage­ment tools increa­sed. SME len­ding doesn’t look as that an attrac­tive allo­ca­ti­on wit­hin their new risk appe­ti­te, port­fo­lio stra­te­gy, and com­mer­ci­al poli­ci­es.
  • Consequence

  • This has ope­ned oppor­tu­nities for new ent­rants in the mar­ket. Crowd­fun­ding, tra­di­tio­nal and alter­na­ti­ve debt pro­vi­ders, payment ser­vices, bro­kers and all kind of Fin­tech plat­forms are gro­wing. Such alter­na­ti­ves are eating away more reve­nues of banks on pro­ducts like for­eign exchan­ge tran­sac­tions or stock­bro­king, whe­re mar­gins were just huge.
    Arti­fi­ci­al Intel­li­gence opens fur­t­her oppor­tu­nities for boo­m­ing Fin­tech even on tasks such as rela­ti­ons­hip, port­fo­lio manage­ment and SMEs len­ding ser­vices. Banks thus will trans­form them­sel­ves even fart­her towards the­se new lower-cost com­pe­ti­tors or try to inte­gra­te them. An issue with this deve­lop­ment is that such chan­ges requi­re cli­ents’ know­ledge to shop for each pie­ce indi­vi­dual­ly.
  • Outlook

  • Regu­la­ti­on will play an important part in how banks might keep their pri­ma­ry role in money crea­ti­on. In addi­ti­on to taking pre-exis­ting depo­sits of savers, banks lend to bor­ro­wers. This crea­tes depo­sits of new money wit­hin ratio­na­le limi­ta­ti­ons of pro­fi­ta­bi­li­ty, sol­vency and cen­tral banks reser­ves. Bank len­ding with money crea­ti­on might by design remain more effec­tive than the mere inter­me­dia­ti­on of loan­ab­le funds of most alter­na­ti­ve len­ders. But banks must iden­ti­fy and finan­ce worthwhile pro­jects . Worthwhile means in this case that their aggre­ga­te resi­du­al risk of non-repayment is wit­hin equity’s capa­ci­ty to cover and pro­pen­si­ty to risk such los­ses.
    Finan­ci­al reporting stan­dards such as IFRS 9 might have qui­te an influ­ence too on future loan port­fo­li­os and pri­cing.  They will con­si­der in more detail sec­tor, dura­ti­on, col­la­te­ral and rating.
  • Consequences

  • Finan­ci­al pro­ducts and ser­vices are beco­m­ing che­a­per and mar­gins dwind­le. Low inte­rest levels also moti­va­te well infor­med or advi­sed custo­mers to act. They drop often over­pri­ced pro­ducts such as cus­to­dy, FX or most­ly under-per­for­ming active asset manage­ment for che­a­per solu­ti­ons or mana­ge their assets and tran­sac­tions them­sel­ves. Banks thus have to cut ope­ra­ting costs and increa­se effi­ci­en­cy of rela­ti­ons­hip manage­ment, redu­cing also SMEs len­ding ser­vices. Full ser­vice is restric­ted to few cli­ents and focus put on attrac­tive loo­king pro­ducts. It is easy to sha­re many ana­lysts’ con­sen­sus of a lar­ge public com­pa­ny. And so is to extend a mortga­ge with low capi­tal requi­re­ments, until a pro­per­ty bub­b­le bursts. Even just buy­ing not real­ly risk-free sover­eign debt, ent­ails less risk of bla­me than ade­qua­te­ly ana­ly­se and assu­me risk of a start­up.

What can I do?

External support to restructure companies in Greece

Taking advantage of recent changes for viable businesses.

Febru­ary 8th 2016, Dr. Dani­el H. Brüll­mann, www.arranger.ch,

After noti­cing in a pre­vious paper that the impro­ved Greek legal frame­work for insol­venci­es, which still seems dys­func­tio­nal in some aspects, and the recent reca­pi­ta­li­za­ti­ons of banks open oppor­tu­nities to com­pa­nies and entre­pre­neurs to rest­ruc­tu­re their busi­nes­ses, we address some of the steps to under­ta­ke for eit­her out-of-court or in-court rest­ruc­tu­ring to save long term sur­vi­val of a via­ble busi­ness.

The bur­den of credi­tors to opi­ne on the finan­ci­al situa­ti­on, the via­bi­li­ty of the busi­ness and whe­ther and how the mea­su­res shall affect the satis­fac­tion of the sta­ke­hol­ders can be redu­ced pro­du­cing clear and trans­pa­rent pro­po­sals.

A via­ble tur­naround con­cept with a cohe­rent stra­te­gy and detail­ed mea­su­res shall thus address the cri­sis situa­ti­ons, and con­vin­ce sta­ke­hol­ders that it can be imple­men­ted suc­cess­ful­ly to pro­vi­de impro­ve­ments for the sta­ke­hol­ders.

A neu­tral view is vital to find even crea­ti­ve mea­su­res favor­able to all. An exter­nal team com­ple­men­ting busi­ness rest­ruc­tu­ring, legal and auditing skills and qua­li­fi­ca­ti­ons can effi­ci­ent­ly add resour­ces for an unbia­sed ana­ly­sis of the situa­ti­on and the imple­men­ta­ti­on of urgent mea­su­res. It can also media­te con­ver­gent solu­ti­ons accep­ta­ble to the par­ties even fol­lo­wing unpro­duc­tive nego­tia­ti­ons.

It might sound need­less to say, but credi­tors want to reco­ver as much as pos­si­ble of their claims and they need to be con­vin­ced that they will. Credi­tors may not renoun­ce to any of their rights, but they might have to accept limi­ta­ti­ons in order to maxi­mi­ze the amount of repayments which they can rea­son­ab­ly expect.

How can we con­vin­ce credi­tors that they can impro­ve their situa­ti­on? What have we to pro­du­ce and exp­lain? What else do we have to do, in order to esta­blish such con­fi­dence?

As Law exten­si­ve­ly sug­gests in chap­ter seven of the insol­vency code for Reor­ga­ni­za­ti­on, we shall pro­du­ce detail­ed infor­ma­ti­on about the finan­ci­al sta­te of the com­pa­ny, cau­ses, assets, lia­bi­li­ties and cash posi­ti­on as well as any infor­ma­ti­on of eco­no­mic or noneco­no­mic natu­re that could affect it to allow for a com­pa­ri­son of satis­fac­tion of the sta­ke­hol­ders accord­ing to rest­ruc­tu­ring sce­n­a­ri­os and that based on liqui­da­ti­on.

We shall descri­be cor­po­ra­te struc­tu­ral chan­ges, orga­ni­za­tio­nal chan­ges and ope­ra­tio­nal pro­grams, finan­cing, and modi­fi­ca­ti­ons to the rights of invol­ved sta­ke­hol­ders such as con­ver­si­on of claims to sha­res for the suc­cess­ful con­ti­nua­ti­on of the busi­ness or its trans­fer and how to ensu­re the imple­men­ta­ti­on of the pro­po­sed mea­su­res.

This has to take into con­s­i­de­ra­ti­on a safe assess­ment of the rights and gene­ral legal posi­ti­on of every credi­tor, depen­ding on the class of insol­vency credi­tors to which one belongs, or of others invol­ved in the plan without being a credi­tor, which will influ­ence any mea­su­res such as for­gi­veness of debt, reduc­tion or payment in instal­ments of claims, wai­ver or restric­tion of a lien or secu­ri­ty, as well as the posi­ti­on of the debtor in ful­fil­ling the plan and the resul­ting obli­ga­ti­ons.

Howe­ver, such bankrupt­cy pro­ce­du­res are com­plex and time con­suming and one might want to avo­id them.

To pro­du­ce such and bet­ter alter­na­ti­ves tho­rough­ly, we must be sure to:

  • Exami­ne the details of the situa­ti­on and defi­ne long term stra­te­gic oppor­tu­nities of the busi­ness.
  • Assess the inte­rests of all sta­ke­hol­ders. A broad view can inspi­re alter­na­ti­ve stra­te­gic sce­n­a­ri­os.
  • Pre­pa­re solu­ti­ons tru­ly favor­able to all sta­ke­hol­ders inte­rests.
  • Defi­ne ope­ra­tio­nal rest­ruc­tu­ring mea­su­res such as stra­te­gic re-posi­tio­n­ing, asset focu­sing and key manage­ment chan­ges.
  • Defi­ne con­trol to insu­re imple­men­ta­ti­on.
  • Com­mu­ni­ca­te to the sta­ke­hol­ders in a plain, trans­pa­rent, under­stan­d­a­ble and con­vin­cing form.

Such princi­ples app­ly to eit­her out-of-court or in-court solu­ti­ons such as the rati­fi­ca­ti­on of rest­ruc­tu­ring agree­ments appro­ved with the majo­ri­ty of credi­tors. In more radi­cal cases of Spe­cial Liqui­da­ti­ons, whe­re the busi­ness or via­ble parts of it shall be put on sale at auc­tion, a spe­cial focus has to be put on buil­ding up the demand or an ade­qua­te and accep­ta­ble acqui­si­ti­on vehi­cle.

Should it never­theless come to a bankrupt­cy pro­ce­du­re, the gathe­red infor­ma­ti­on might be qui­te use­ful, not least for an even­tu­al acqui­si­ti­on of assets.

In any case, a com­pre­hen­si­ve under­stan­ding of pos­si­ble results of an insol­vency pro­ce­du­re helps us to pro­po­se and nego­tia­te bet­ter out-of-court solu­ti­ons.

Of cour­se, imple­men­ta­ti­on is not easy and con­fi­dence might initi­al­ly be scar­ce, but via­ble busi­nes­ses have to con­si­der also decisi­ve actions to assu­re their long term sur­vi­val.

Over indeb­ted com­pa­nies can­not find any finan­cing for their ope­ra­ti­ons, as no len­der in his mind is ready to sha­re repayments with exis­ting credi­tors.

A re-esta­blish­ment of a sustain­ab­le debt level is thus a pre-con­di­ti­on to avo­id con­ti­nuing death of eco­no­mic activi­ty even if in bet­ter mar­ket con­di­ti­ons, impro­ved liqui­di­ty, avai­la­bi­li­ty of equi­ty and buy­ers for non-core assets impro­ved.

Our expe­ri­ence shows that the extent of ent­an­gle­ment and per­so­nal lia­bi­li­ties span­ning from intra­group rela­ti­ons to post-dated checks is often unde­re­sti­ma­ted.

Pro­blems and solu­ti­ons can be sides of the same medal.

Rest­ruc­tu­ring works best if employ­ed ear­ly on, not in des­pair. We thus recom­men­ded a time­ly action

Investment opportunities restructuring Greek businesses

Changes in regulation shall help restructuring Greek businesses

Invest­ment oppor­tu­nities are expec­ted along the pro­cess.

Febru­ary 2nd 2016, Dr. Dani­el H. Brüll­mann

Amidst many evi­dent pro­blems in Greece the­re are also posi­ti­ve deve­lop­ments, which should not be over­loo­ked. Gra­du­al chan­ges to the legal frame­work for insol­venci­es and reca­pi­ta­li­za­ti­ons of banks open oppor­tu­nities for com­pa­nies to rest­ruc­tu­re their busi­ness and for credi­tors to impro­ve their low expec­ted reco­very rate. Com­plex and long pro­ce­du­res have been sim­pli­fied. Banks until now reti­cent have to take action. First lar­ge and com­pre­hen­si­ve rest­ruc­tu­rings have recent­ly emer­ged. Also medi­um sized com­pa­nies might be well advi­sed to shrug off hesi­ta­ti­ons and fol­low such examp­les.