Most Banks now include distressed debt selling programs as part of their overall balance sheet and income statement management strategy. Distressed debt sales can generate immediate recovery income for banks in two ways: first by impacting loan loss reserves from the sale of charged-off debt, second by reducing classified asset totals on the balance sheet through the sale of other non-performing and sub-performing loan assets. Boards of Directors are increasingly finding that the sale of debt is an essential tool to achieve higher stock prices and report improved earnings.
In the past, lenders were effectively able to grow out of the bad debts, which enabled them to postpone the day of reckoning. This model has changed and regulators have grown wary of letting bad loans roll over endlessly at the expense of fresh lending. While banks can dispose of distressed assets themselves, this process can be time consuming (upwards of 2 years) and costly as the Bank’s capital for lending is decreased as long as they own the asset. Onyxx specializes in this work and enables our client Banks to focus on its performing assets and new loans.