Non Performing Loan

According to the official European definition, non-performing loans are those for which interest payments have ceased for a period of at least 90 days. As a result of this, the likelihood of the borrower defaulting on a loan rises as this situation continues.

No longer only is the lending bank no longer compensated, but due to the increased default risk of the bank’s counterparty (the borrower), the bank must strengthen its provisions. Consequently, the ability of the banking sector to support the financing of the economy is hindered by this mechanical limitation (especially in Europe where the banks participate very largely in the financing of companies).

The bank must make provisions (accounting obligation) and potentially set aside more equity (regulatory obligation) if a loan is not or no longer repaid, which reduces its ability to provide new loans; if the amount of bad debts is too high, the bank’s profitability is reduced, which can pose problems for its economic survival and harm the confidence placed in it by its financial partners.

A sharp increase in these loans occurred following the financial crisis of 2008; however, these loans have been steadily decreasing since then (but slowly according to the authorities). In spite of the fact that they are large (in the region around 780 billion euros, i.e. several percentage points of European GDP), these loans are concentrated in a few countries (Greece, Italy, etc.) and in a few types of institutions (banks).

Problems persist due to the high level of non-performing loans:

An impediment to bank profitability due to increased administrative costs and financing costs; Provisioning requirements that weigh on equity levels; A risk to banks’ viability from the high levels of non-performing loans. An impediment to monetary policy transmission and financing due to the immobilisation of capital to guarantee unproductive assets.

The European Council of July 11, 2017, adopted an action plan that led to the adoption of a package of measures by the European Commission on March 14, 2018, in an attempt to stem or, at the very least, limit this phenomenon. A new set of guidelines issued by the European Banking Authority (EBA) in October 2018 (effective June 30, 2019) will help banks better understand the loans they hold.

The following are some of the measures’ stated goals:

Underprovisioning can be avoided if automatic provisioning practises with deadlines are used; privileged creditors can be better protected; and non-performing loans can be sold on secondary markets.

We recognise the significance of eradicating these NPLs in light of the current situation. To put it another way, it makes sense to think of the PNP as being somewhere between zero and one hundred percent of the amount of money that should be reimbursed.

In this way, any financial institution can aim to:

To begin, banks must ensure that they are complying with IAS / IFRS accounting rules, which states that banks must not only provide from an accounting perspective but also from a prudential one. In order to do this, they use internal models that are based on the book value of a PNP, which is obtained by realising a discounted sum of the probable value of future reimbursements, it being specified that this value also depends on the cos. In terms of unsecured loans, the ECB’s expectations and the European Commission’s proposals are very similar: After two years of being classified as “non-performing,” a provision of 100% is expected; for secured loans, differences remain, so securitization may be necessary. Securitization is a financial technique that involves selling the NPLs in the secondary market to investors by transforming these illiquid debts into financial securities that are easily exchangeable and therefore liquid on the c-market; this technique is called “securitization.” Two types of securitizations are available to investors: the traditional one, where the bank continues to manage the credit, but no longer bears risk, and the synthetic one, where credit is transferred, but no credit is transferred. ‘assets’ are realised through a credit derivative; several factors contribute to a valuation (pricing) higher or lower NPLs in the context of securitization or, more generally, of a sale on a secondar basis. If you’d like to clear your bank’s balance sheet, you’ll need to sell PNPs at a discount of 10% to 50% of their initial value; – finally, to set up a defeasance structure, which is the last resort to do so; in order to protect the financial interests of the banking sector, these structures are typically established following a public decision that seeks to remove risky assets from the balance sheet An asset management company (SGA) acquires and manages previously valued PNPs in order to avoid a bail-in risk. More than two dozen SGAs have been set up since 2008 to assist banks in difficulty with the sale of risky assets; in practise, a defeasance structure is an asset management company (SGA).

What is a portfolio of projects?

The more projects and their size you have, the larger your organisation will be. The information associated with all of these projects, such as allotted resources or allotted budgets, is then compiled into a project portfolio.

However, the increasing number of projects, both internal and external, has its own set of challenges to manage and keep track of.

As a result, the need for project management comes into play.

A real governance tool, project portfolio management (or PPM) is also known in English as project management (or PPM).

Management of a project portfolio’s goals and challenges

Project portfolio management brings together all of the information related to projects in a single location. For instance:

  • Resources, both financial and human,
  • Schedules,
  • The dangers
  • Profits,
  • Types of projects being considered

Because of this, the GPP provides an overview of all projects in order to:

Establish a prioritised list of projects based on their importanceput an end to a number of initiatives ( duplicates with others)

To improve the return on investment (ROI) of various projects, synthesise and consolidate information ( Return on Investment , or ROI )

To ensure that the company’s overall strategy is maintained

Improve the communication between the various stakeholders in project management.

How to manage a project without deviating from the path?

To keep track of progress and ensure success, a project’s steering must be precise.

This is the end result of your hard work defining the scope of your endeavour, selecting the project management approach that best suits your needs, and creating detailed project specifications. What are the steps to take to ensure a successful project? Project managers have access to what resources?

Using the advice in this article, you can ensure that your project runs smoothly. Is your project ready to go? It’s a car!

A project’s management can be defined as follows:

  • Know how to manage a project
  • A project manager’s job entails the following: In order to keep things simple:
  • Fully comprehend the project’s scope
  • Using pre-established indicators, ensure that follow-ups are carried out in a timely manner.
  • Project progress is ensured by completing tasks and milestones and delivering finished products.

To make adjustments to the project schedule and to keep tabs on the discrepancy between the provisional and actual timetables.Adapting the budget to the whims of the project will help you keep it under control.

Supervise a project team to ensure that resources are managed effectively, and make the right decisions if there are risks to face.

After a project has been planned and budgeted and its specifications have been established, project management begins.

In contrast to other key stages of project management, such as:

  • The first version of the manuscript
  • The conceptualization and design of the project
  • The framing task,
  • The project’s final report.

What is the project manager’s role in project management?

As the project manager, he or she is primarily responsible for the coordination and organisation of the project, but he or she also has several other talents:

Taking a step back and always comparing the forecast to the actual progress of the project to keep an eye on things to be able to anticipate problems and adapt to them so that the project’s implementation is not jeopardised, for the project’s roadmap, a responsiveness and a capacity for decision-making are respected mastery of project management methods and tools for accurate and measurable management.

Human resource management and encouraging teamwork.

A steering committee (COPIL) made up of operational departments, business departments, and sometimes project management can provide project management, or even governance, for large-scale projects.

Portfolio Management

Many firms are familiar with the term “project management,” but “portfolio management” still is a new notion to many.

Other than that, things like this are on the rise. Project-based work has become more and more common in organisations of all sizes, including those with several locations.

When competing initiatives inside the same company are all proving to be a success, how do you reconcile the differences? What instruments does management get at its disposal to help the company achieve its ultimate goal of growing turnover? What can be put in place to ensure also that teams participating are well-managed and well-coordinated??

Because of its effectiveness, strategy implementation is now a reality.

Explore project portfolio management, from definition to problems and the tools you’ll just want to get started.

Portfolio management is defined as:

To manage the portfolio of a project is to…

Managing a company’s projects is referred to here as “strategy implementation” (or “project portfolio management” on French).

Helps to arbitrate the importance of a subject

If all initiatives and resources are centralised, it will be easy to maintain track of them.

Keeping the broader strategy in mind

With so many organisations juggling many projects all at, this all-encompassing strategy is essential if they want to complete them on schedule and within budget. The efficiency and visibility of a project that is managed in a disconnected manner suffer.

Every aspect of portfolio management is overseen by the Portfolio Management Office (PMO).

Delivering a service: the project management office’s mission

And a title: the project’s executive officer.

What kind of activities are we talking about?

The project is being watched over. For portfolio management to be effective, it must be in line with the company’s mission. Project management and monitoring both require determining which projects should really be prioritised and why.

The management of the portfolio.

Authentication is necessary:

Results from several projects compared in terms of coordinating the allocation of time, resources, and financial resources.

All of this information must be provided to management on a regular basis.

Management assistance for projects. With the role of the Project Administration Office (PMO), project team members can more easily achieve their objectives. PMO: Standard procedures or benchmarks are established in order to achieve this goal.

In order to maintain the greatest degree of uniformity, Get everyone in your company on board with your new project’s culture.

The successful implementation and adoption of a given piece of software by employees is also critical for support operations.

Assistance with the project is available. The portfolio management administrator completes the process by assisting in the day-to-day management of the project. It’s possible that he could take on the position the project manager for such a single, specific project.

Traditional project management differs from project portfolio management.

Despite their resemblance, “project” and “portfolio” should be distinguished.

The primary focus from the first is the operational realisation of a project: getting the job done well

If we take the second method, the corporation must take a step back and look at all of its projects in the context of their broader plan.

Is your project management skills up to snuff?

Manage a company’s complete portfolio of projects is a significantly more time-consuming task. Your organization’s overall strategy is also taken into consideration when developing a more sophisticated risk management component.

how to handle project portfolios in the most efficient manner Are you aware of the resources at your disposal to aid you throughout your endeavours? Project portfolio management technology will be necessary for organisations to do this, but how do you choose one and what criteria do you use?

Let us show you how PPM works so that you can make informed choices about which answer is best for your company.