1

Collection agencies and banks: examples of partnership in Europe and reality of Russian market.

Mariusz Kloska

Managing Director - EOS Russia

2

Number of average consumer credits per capita in kEUR – highest values in Ireland, Spain and UK in EuropeSelected European countries

Slovenia 1.4

Netherlands 1.5

Portugal 1.5

Italy 1.7

Poland 2.1

Belgium 2.1

Germany 2.1

Greece 3.2

United Kingdom 4.2

Spain 5.0

Ireland 6.8

Czech Republic 1.1 Serbia 0.1

Hungary 0.4

Slovak Republic 0.4

Macedonia 0.5

Baltic Countries 0.5

Bulgaria 0.5

Russia 0.5

Turkey 0.6

Ukraine 0.8

Romania 0.9

Croatia 0.9

Czech Republic 1.1

3

Ratio of consumer credits to GDP – Ukraine and Poland with highest percentage Selected European countries in %

United Kingdom 14.2

Greece 15.0

Ireland 16.1

Spain 21.0

Poland 22.5

Ukraine 33.0

Baltic Countries 8.4

Portugal 9.3

Bulgaria 10.3

Macedonia 10.5

Turkey 11.4

Romania 13.7

Italy 6.5

Germany 6.9

Czech Republic 7.0

Slovenia 7.8

Croatia 7.9

Serbia 1.1

Slovak Republic 2.9

Hungary 3.7

Netherlands 4.2

Russia 6.2

Belgium 6.4

4

Average payments for banks decreased especially in Russia and Poland dramatically from 2008-2010

1,001,001,001,001,001,00

0,74

0,88

0,56 0,58

0,67

0,88

0,71

0,48

0,58

0,87

CzechPolandRussia

0,54

Hungary

0,63

RomaniaSlovakia

2010

2009

2008 (=1)

5

Average payments for banks decreased in most of the countries in Eastern Europe except from ex-Yugoslavia

1,001,001,001,00 1,001,071,00

0,970,94

1,141,07

0,67

0,85

0,99

0,87

Bulgaria

1,0

SerbiaRomania

0,74

Greece Slovenia1)Macedonia

2010

2009

2008 (=1)

1) Telco data due to business in Slovenia. 2008 figures are not available

6

Top 10Market entry 1993Mostly contingency

collection, therefore EOS does not suffer from impairments like competitors

UK

First Credit, EUR 85m revenueLowell Group, EUR 56mRobinson Way, EUR 50mMoorcroft, EUR 50mWescot, EUR 39mAktiv Kapital, EUR 20m

Key Market Players2009 2010e 2011e

GDP ($bn) 2.183 2.222 2.297

GDP growth (%, local currency)

-4,9 1,3 2,5

Inflation (%) 2,2 2,7 1,6

Inhabitants (m) 61,8 62,2 62,6

Outstanding consumer credits ($bn)

371,7 n/a n/a

Key Economic Figures

UK is a good example where markets can go in future in EE

Market Maturity

Embryonic Growth Maturity Decline

EOS

Most mature market after US, DP marketA lot of private equity companies invested in NPL and

bought DCAs During financial crisis market suffers a lot (impairments)500 DCAs on the marketHigh level of outsourcing – 42% of NPL are collected

from external DCAs47% of outstanding debts are older than 60 daysNPL volume in 2009: EUR 155 bn (plus 44% compared

to 2008)

Key Facts Debt Collection Market

7

Changed profile of debtor,

Debtors is more like client than enemy!

Trade Information bureau

Linear and progressive comission,

Securitization Funds,

E-court ,

In total, the segment of debt recovery of purchased debt packages increased in 2006 – 2009 by 22 percent,

Size of collection market should be stabile bu 2014.

The debt management market in Poland

Key information about the market

8

In Russia, Poland and Czech Republic a debt collection license is not needed – only in Poland regarding servicing of fundsSummary

Comments

No NoBulgaria

Poland License from Polish Financial Supervisory Authority is only required if you handle claims purchased by investments funds (securitisation transactions)

License only needed for servicing of NPLs from investment funds

No license required

No No

Czech Republic

No No Law under consideration regarding debt collection license and fee policies towards debtors No license required

Regulations debt collection

Regulations debt purchasing

EUR 350 k minimum capital required for debt collection services

License required

No (but law for securitization)

9

There are in Hungary and Romania regulations regarding debt purchasing – only in Hungary a special license is requiredSummary

Regulations debt collection Comments

Regulations debt purchasing

No NoSlovakia

Hungary For debt purchasing special license is needed, company must be an incorporation with minimum of 200TEUR capital, direct monitoring of authorities, detailed quarterly reports to authorities necessary, long procedure to receive license

No license required

No Yes

Romania No Yes No special law in Romania regarding debt collection services, only general laws covering data and consumer protection

Debt Purchase – laws are covering the transfer/assignment of receivables; no special vehicle is necessary for it. One company can do DP and debt collection

No license required

Special DP license required

10

Increase in providers of pre-litigation legal services

by about 24 competitors per month!

by about 15% within 12 months!

And not forgetting approximately 150,000 lawyers!

Month 07.2009 08.2009 09.2009 10.2009 … 08.2010

No. of ‘registered’ debt collection providers 1,457 1,512 1,558 1,628 1,746

How many competitors are there on the German market?

The German debt collection market is highly competitive and only sparsely concentrated.This also applies to the B2B debt collection niche!

11

Source: EOS KSI client satisfaction survey 2009 (Sept./Oct. 2009)

Friendliness Ø 4.44

Availability Ø 4.28

Service focus Ø 4.17

Honesty Ø 4.17

Commitment Ø 4.13

Punctuality Ø 4.12

Response time Ø 4.08

Service quality Ø 4.20

Data protection Ø 4.29

Accuracy Ø 4.13

Competence Ø 4.11

Focus Ø 3.97

Processing time Ø 3.75

Realization Ø 3.68

Reporting Ø 3.62

Quality of products Ø

3.93

Very dissatisfied 2 3 4 Very satisfied

Prove what you promise – USPs in the B2B market

We promise quality and we deliver quality – The proof

How our clients perceive our quality and service:

12

Source: EOS KSI defaulting client satisfaction survey 2010 (March 2010)

Understanding Ø 4.27

Availability Ø 4.21

Punctuality Ø 4.12

Friendliness Ø 4.04

Response time Ø 3.89

Honesty Ø 3.79

No pressure Ø 3.62

Service quality Ø 3.99

Focus Ø 4.12

Data protection Ø 4.09

Competence Ø 3.95

Remain clients Ø 3.80

Neutrality Ø 3.78

Transaction handling qualityØ 3.64

Reasonableness Ø 3.62

Quality of service Ø 3.86

Very dissatisfied 2 3 4 Very satisfied

Prove what you promise – USPs in the B2B market

We promise quality and we deliver quality – The proof

Even our defaulting clients experience quality and service: