Independent review and analysis

Back to basics with loan data

As the only truly independent due diligence provider in Ireland, we have been involved in most of the loan sales activity over the last four years.

Our involvement has included data, compliance and process reviews as well as full due diligence exercises, but we remain to be convinced that companies selling loan portfolios are managing their core data properly.

During the boom times, systems and origination processes were under pressure, manual systems were overloaded and the accuracy of data input suffered as a result. Despite all the good work which is now being put in place by lenders to ensure stronger internal quality controls, core data remains incomplete and in some cases inaccurate. We believe the need to review and correct inaccurate historic data should still be a priority. Not simply to ensure lenders have accurate data to rely on, but also to potentially attract a better price from a potential buyer of loan assets.

The residential price index showed encouraging increases in 2015, giving confidence to prospective loan purchasers. As sellers continue to deleverage both core and non-performing loans, loan book prices are increasing, but buyers are also looking for reassurance as to the quality of the asset being purchased, and that necessitates the need for accurate data.

A seller can start the process with a vendor due diligence exercise and provide it to a prospective buyer. This is now being seen as proactively prudent.

Against a background of regulatory reform, tougher supervision, stronger audits and more accountability for firm’s directors, standards in the market are improving. That brings credibility to the Irish market.

The opportunities to purchase quality assets at a reasonable price remain plentiful. It is now apparent that the “one-size-fits-all” due diligence approach is not appropriate. We are seeing increasing trends of potential investors and debt purchasers looking for independent reviews, tailored to their specific requirements.

Rockstead is well positioned to help both vendors and purchasers with their due diligence requirements.

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