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Vadim Khrapoun, Partner, Head of Business Restructuring and Financial Recovery Practice, PwC Russia, discussed how to manage non-performing assets in times of economic crisis and recovery. Effective management of non-performing and non-core assets can be an essential driver of economic development. In times of crisis, government institutions and their authorised agents must draw upon the entire toolbox of legal, financial and management practices. The widespread global practice of transferring non-performing assets to special banks or funds to manage and compensate losses incurred by global economic crises is a relatively recent practice in Russia. In 2018, a local non-core asset bank was established when the national financial and banking systems were exposed to risk due to issues faced by the Moscow Ring financial organisations. Distressed economic sectors during the pandemic could lead to increased bad debt.
Vadim Khrapoun observed that problem of non-performing and non-core assets has been on the corporate agenda for quite some time. Crises can occur any time and always create challenges around loans and non-core assets. “There are two ways to deal with non-core assets: creating a non-core asset management department within a bank or delegating the management function to professional organisations like specialised banks or asset managers. Their main job is to bring the assets back to the economy,” Vadim continued. “Divesting the bank’s balance sheet from non-core assets is also a form government support, as it lowers pressure on capital and releases funds to finance future operations.”
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