ING Bank Śląski | Annual Report 2014

ING BANK ŚLĄSKI

ING BANK ŚLĄSKIAnnual Report 2014

10. Credit Risk Management in Group Companies

The ING Bank Śląski S.A. Group comprises as of 31.12.2014 of the following entities:

  • Subsidiaries:
    • ING Securities S.A. –  (100% of shares),
    • Solver sp. z o.o. (88.93% of shares),
    • ING ABL Polska S.A. (100% shares):
      • ING Commercial Finance Polska S.A. (100% shares),
      • ING Lease Polska Sp. z o.o. (100% shares).

In view of the character of operations, the credit risk management is applicable mainly to ING Commercial Finance Polska S.A. (ING CF) and ING Lease Polska Sp. z o.o. (ING LP) in which risk management is realised in line with the ING Group standards in terms of structure and processes (tools) to ensure realization of business targets from risk point of view. Moreover, general credit risk management rules for ING CF and ING LP are described in the document “General principles of supervision and granting delegated authorities in related entities of ING Bank Śląski SA”.

Risk management in ING Commercial Finance Polska S.A. and ING Lease Polska Sp. zo.o. is performed by separate risk units that have the experience in and knowledge of the offered products and management of credit risk related thereto.

Risk management in ING CF and ING LP takes account of some elements of co-operation with ING Bank Śląski S.A. such as:

  • development of a document determining the general assumptions as regards risk appetite of a given unit and its approval by the Supervisory Board of ING CF and ING LP consisting of ING Bank Śląski S.A. representatives;
  • co-operation of relevant units of ING CF and ING LP with their functional equivalents at ING Bank Śląski S.A. as regards development of the management information;
  • participation of ING CF and ING LP representatives in the meetings of the ING Bank Śląski S.A. Committees responsible for credit risk management. For instance, ING CF and ING LP representatives present credit risk reports covering lending portfolio of their own units during the meetings of the ING Bank Śląski S.A. Credit Policy Committee.

10.1. Credit risk management in ING Commercial Finance Polska S.A. 

ING Commercial Finance S.A.’s organizational structure covers the following organizational units, as regards credit risk management:

  • Credit Risk Management Department, 
  • Collection Department.

Those units’ mission consists in ensuring the right balance  between the Company’s commercial goals and its acceptable level of “risk appetite” taking into consideration the current economical realities.  

This goal is reached through the following actions:

  • elaboration of credit policy principles, processes and procedures for approval of acceptable credit risk level purposes towards companies and clients’ portfolio, support of  the development of instruments serving the risk identification and evaluation, execution of credit decisions, provisioning for credit risk and initialization of required changes as regards credit process management;
  • carrying out credit analysis and credit decision taking;
  • increasing among Company’s employees the awareness of credit risk in order to mitigate it;
  • management of Clients’ exposure with increased risk aiming at minimize the Company’s risk and loss.

Commercial functions are separated from the transaction’s risk evaluation and the Client’s risk (the “four-eyes” principles).

Beneath a detailed scope of tasks for the respective organizational units as regards the credit risk management process at ING CF is presented.

10.1.1. Supervisory Board

The Supervisory Board performs periodic evaluation of the Board’s realization of credit risk management’s goals and strategy in the Company.

10.1.2. Board of Management

The Board of Management of ING Commercial Finance Polska S.A.:

  • approves the Credit Risk Policy that defines the strategic approach to credit risk decision taking as well as its acceptable level;
  • periodically, but not less then once in a year, it informs the Supervisory Board about the level and profile  of risk as well as of the changes in the Credit Risk Policy;
  • performs an overview of all processes and monitoring methods as regards the quality of credit exposure.
10.1.3. Committees

Credit decision taking takes place in two-person mode by authorized people (according to SAP).

10.1.4. Credit Risk Management in the Company

The Credit Risk Management Department’s mission consists in maintaining the right credit risk level in the Company. 

The credit risk management in the company is conducted by:

  • Credit Risk Management Department,
  • Collection Department.

The member of the Management Board, the Credit Risk Management Department Director reports directly to the President of the Management Board. The Credit Risk Management Department Director oversees the Debt Collections Department.

The tasks of the respective Units, that are taking part in the credit risk management process, are presented below.

10.1.5. Credit Risk Management Department
  • elaboration of effective credit risk management systems  through constant maintenance and development of credit policy rules and process as well as procedure description in order to ensure the right balance between the actual commercial goals of ING CF and an adequate awareness / risk appetite level considering the market realities in Poland;
  • ensuring the functioning of the risk management unit that is effective and adequately responding to the present conditions and processes through management, project participation, processes review, reaction to front office and operations requests, realization of Board’s and ING Group’s Head Office’s motions;
  • credit risk management, related to Clients’ financing, by ensuring a risk counseling in the credit decision-taking process, enforcement of credit decision realization, recommendation of necessary changes in credit process management; 
  • ensuring substantial data for credit policy rules and processes as well as procedures in order to approve the allowed level of Clients’ risk; 
  • increasing the credit risk awareness among Company’s employees in order to limit this kind of risk; 
  • recommendation of the provisions’ level and necessary changes in credit process management,  product definition and credit policy in order to limit risk;
  • support of credit risk process management through the development of risk identification and measurement tools, as well as the monitoring as regards the credit portfolio’s quality; 
  • collaboration with audit and other organizational units from ING Group as regards credit risk management as well as provisioning of credit receivables. 
10.1.6. Collection Department
  • management and supervision over receivables’ execution  as regards those clients who default the factoring contract’s conditions; 
  • offering extensive collection services of recipients (contractors);
  • supporting the Credit Risk Management Department in the  process of provisioning irregular clients.   

10.2. Credit risk management in ING Lease Polska Sp. z o.o. 

ING Lease Polska Sp. z o.o.’s organizational structure covers the following organizational units, as regards Credit Risk Management:

10.2.1. Risk Management Division

Risk Management Division is managed by Management Board Member, Risk Management Director. Risk Management Division consists of 4 units:

  • Credit Policy and Portfolio Management Section, 
  • Credit Risk Assessment Department,
  • Payment Monitoring and Remarketing Section,
  • Restructuring Team. 

Those units’ mission consists in ensuring the right balance between the Company’s and Group’s commercial goals and acceptable by the Company and the Group level of “risk appetite”.

10.2.2. Credit Policy and Portfolio Management Section

The main responsibilities of the Section are:

  • development of  guidelines and credit policies, preparation of recommendations for the product cards, credit policies, as well as new and modified credit products,
  • ensuring compliance of ING LP credit policies and procedures with the principles and practice of ING Group,
  • management of requirements regarding credit portfolio as well as preparation of  analysis and recommendations referring to ING LP portfolio,
  • participation in the development and implementation of credit risk models.
10.2.3. Credit Risk Assesment Department  

This department consists of 2 teams:

  • Credit Risk Assesment Team – Standard Transactions,
  • Credit Risk Assesment Team – Non-standard Transactions.

The main responsibilities of the Department:

  • providing advice regarding risk in the credit decision-making process for both corporate and retail clients, execution of realization of the credit decisions, recommending necessary changes in the credit process management,
  • preparing credit recommendations for leasing transactions for both corporate and retail clients,
  • making credit decisions within the scope of granted approval authorities,
  • responsibility for the credit assessment process by controlling time assessment of the transactions, the analysis of bottlenecks in the process and proposing innovative changes to improve the efficiency of the process;
  • presenting the recommended transaction on the relevant credit committees,
  • participation in reviews of clients’ portfolios that are under observation, the so-called “Watch List” portfolio.
10.2.4. Payment Monitoring and Remarketing Department 

The main responsibilities of the Department:

  • managing difficult loans in order to minimize the credit risk and losses of ING LP for all corporate and retail segments through the conducting of collection against customers with delays,
  • control and negotiations of terms of debt repayment,
  • termination of lease contracts,
  • collection of assets, management of storage of the collected assets and the sale of the collected assets on the secondary market,
  • representing of the ING LP and co-operation with the law enforcement agencies (Police, Prosecution, Courts),
  • control activities and cooperation with judicial supervisors, official receivers, external debt collection companies, remarketing partners,
  • initiating legal action and control of the actions (internal and external) resulting from terminated contracts,
  • estimating and recommending the value of leased assets and possibility of selling them in case of a default,
  • participation in committees related to the management of bad debts (Bad Debt Steering Committee),
  • participation in reviews of clients’ portfolios that are under observation, the so-called “Watch List” portfolio.
10.2.5. Restructuring Team

The main responsibilities of the Team are:

  • management of difficult doubtful exposures to minimize ING LP risk and losses by: restructuring of problem loans, assessing and recommending the amount of write offs, setting ratings for irregular customers,
  • making decisions on the restructured exposures/clients within the scope of granted approval authorities,
  • analysis and reporting in the scope of corporate irregular portfolio,
  • development of principles for difficult exposures management in order to reduce the risk and losses,
  • cooperation with the auditors, law firms and related business units of ING Group in the management of difficult exposures and provisioning for receivables;
  • creating of the loan loss provisions

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