EOS and bpost bank: 24 years of mutual respect
For 24 years, debt collection service provider EOS Aremas and the Belgian bpost bank have been working together in the fiduciary collection segment. They are now strengthening their relationship with a forward flow deal and the purchase of a EUR 36 million loan package. A case study on a fruitful collaboration.
- EOS Aremas and the Belgian bpost bank have concluded an agreement on the sale of unsecured receivables to the value of EUR 36 million.
- The two longstanding business partners have also signed a three-year forward flow deal.
- Is a deal on secured receivables also an option in the future?
The relationship between the two partners is marked by familiarity and a spirit of trust. The retail bank has been in the business for 25 years, and for 24 of those years it has been working with EOS Aremas in its capacity as a debt collection service provider. Just recently, Ivan Demuynck and Roel Dumont closed their biggest deal ever: Since 1 November 2019, EOS Aremas has been continuously buying bpost bank’s non-performing unsecured loans and overdrawn checking accounts that have not been serviced for at least 150 days. This kind of transaction is known as forward flow; in this case the parties have agreed on an initial contract term of three years. EOS Aremas is also acquiring 47,000 collection cases with a nominal value of EUR 36 million from the bank, a subsidiary of the Belgian postal service, and BNP Paribas.
More equity for bpost bank thanks to sale of receivables.
NPL deal the logical next step.
The second attempt then came a year later: “We had all the data about the loan portfolio and so were able to formulate an initial purchase proposal for the cases concerned,” says Dumont. “Alongside our expected returns we were able to produce a good estimate of possible success rates and costs and thus submit a non-binding offer.” bpost bank was ready to talk but wanted an accredited expert to review the offer. In addition, the first step was to have a forward flow agreement on new NPLs; this would then be followed by an agreement on existing cases.
We have handled more than 90,000 cases for bpost bank, so we were very familiar with their loan portfolio.
Respectful interaction instead of reputational damage.
To ensure that this is the case, Dumont and his team follow two principles: “On the one hand we have a highly efficient debt recovery process. Thanks to automation, evaluation and segmentation we know which cases are more likely to be successful,” he says. “At the same time we are conscious of our responsibility towards society. We want to find good solutions for defaulting payers, because everyone deserves a second chance.” Treating defaulting payers with respect is crucial. To make sure of this, EOS Aremas records phone calls and gives its staff ongoing training.
Purchase of secured receivables a future option.
The two men laugh, but they are well aware that the purchase of secured loans would be a significant step. “The business is quite different, because with every loan that you sell you are also selling a security, a piece of real estate,” says Dumont. The acquisition of these kinds of portfolios demands a much more complex analysis than transactions with unsecured loans. “EOS is already buying secured loans in other countries and we see that it involves quite a different way of working. You are responsible for a real estate portfolio, and that is already a major step in the progression from debt collection company to financial investor.”
While the unsecured loans from bpost bank are normally in the range of EUR 2,500 to 50,000, the secured loans are much bigger, on average from EUR 150,000 to 200,000. Most of the loan portfolio of bpost bank consists of mortgages for retail customers. “But it is still too early to discuss the sale of secured packages or possible forward-flow agreements,” says Demuynck. The bank still wants to gather some experience of its own in this area: What kind of cases cause problems? What is the process for the foreclosure of property? “But at some point we will probably have this conversation as well.”