Distressed Asset Management and Divestment Practices by Deposit Guarantee Funds in Serbia and Ukraine

Investment Rating - The report does not explicitly provide an investment rating for the industry. Core Insights - Effective and efficient management and sale of distressed assets are crucial for minimizing risks to financial stability and supporting economic growth. The experiences of deposit guarantee funds in Serbia and Ukraine, along with practices from Western European asset management companies, provide valuable insights for improving bank liquidation frameworks [20][25][31]. Summary by Sections Executive Summary - The paper summarizes the asset management and divestment experiences of deposit guarantee funds in Serbia and Ukraine, highlighting key factors for successful distressed asset management, including sound governance, comprehensive strategies, active asset management, transparent valuation, and competitive sales [20][26]. Chapter 1: Introduction - The introduction outlines the importance of addressing non-performing loans (NPLs) for financial stability and economic growth, emphasizing the need for effective asset management and divestment strategies [29][30]. Chapter 2: Asset Sales - Serbia's Experience - Serbia's NPL resolution strategy was initiated in 2015, leading to a significant reduction in NPLs from a peak of 21.6% to below 5% within three years. The Deposit Insurance Agency (DIA) played a crucial role in managing distressed assets, overseeing a portfolio valued at approximately EUR 8.2 billion in 2016 [37][40][42]. - The DIA's governance framework is based on the Law on the Deposit Insurance Agency, ensuring autonomy and independence in its operations [43][44]. - The DIA's strategic plan focuses on maximizing recovery value through efficient asset management and frequent distribution of proceeds to creditors [46]. Chapter 3: Asset Sales - Ukraine's Experience - The report does not provide specific details on Ukraine's experience in this section. Chapter 4: Important Aspects of Asset Management and Divestment - Key aspects include the establishment of clear legal frameworks, comprehensive asset management strategies, active management to maximize returns, and transparent asset valuation processes [25][26]. Chapter 5: Key Recommendations for Agencies Responsible for Bank Liquidation - Recommendations emphasize the need for strategic planning in asset management, including setting clear objectives, optimizing disposal processes, and ensuring transparency in sales [26][29]. Annexes - Annex 1 provides an overview of bank resolution and liquidation frameworks in Central, Eastern, and South-Eastern European countries, while Annex 2 summarizes asset management practices from various European asset management companies [35][36].