Correction: Fitch Takes Rating Actions On Guber's Italian Special Servicer Ratings
OREANDA-NEWS. This announcement replaces the version published on 16 December 2015 to correct the number of commercial mortgage loans serviced for 2015 and 2014.
Fitch Ratings-London-16 December 2015: Fitch Ratings has taken rating actions on Guber S.p.A.'s Special Servicer Ratings, as follows:
Italian Residential Special Servicer Rating: upgraded to 'RSS2+' from 'RSS2'
Italian Commercial Special Servicer Rating: upgraded to 'CSS2+' from 'CSS2'
Italian Asset Backed Securities (ABS) Special Servicer Rating: affirmed at 'ABSS2'
The rating actions reflect Guber's long-term stability, as evidenced by the continued achievement of the corporate plan and objectives. The ratings also address the operational management for the secured and unsecured defaulted loans. The upgrades reflect the stronger residential and commercial loan performance, and the servicer's increased experience in servicing these loans.
Guber has increased its assets-under-management (AUM) to a total of EUR4.3bn as of June 2015, from EUR3.1bn the previous year. The portfolio comprises 87.8% ABS non-performing loans, while the remainder is split between residential (9.4%) and commercial loans (2.9%). The more favourable Italian non-performing loan market has allowed for new business opportunities, reflecting the company's strong relationship with market participants. Fitch views the new mandates as positive for the company's profitability and sustainability.
A new joint venture (JV) was established in April 2015 between Guber and ReStar S.r.l., enabling Guber to use the real estate owned (REO) resolution method, although this was limited to the acquisition of two assets at the time of review. Guber is also in the process of developing ancillary services to the auction activity, to support parties interested in buying distressed real estate assets. Fitch views these developments positively, as they provide a competitive advantage, while leveraging off the REO experience of the operation.
Guber has adapted its IT infrastructure to respond to the development of the REO department, enabling the servicer to closely monitor the activities around assets. A dedicated corporate portal for assets managed through auctions has been developed.
Guber has additionally extended the customer portal developed last year to all its clients, who can now run their own portfolio reports and monitor performance at loan level. Fitch believes that Guber's in-house IT developers enable the servicer to be highly flexible and competitive.
Guber continues to focus on staff development and offers a comprehensive academy training programme. Over the 12 months to June 2015, an average 78 training hours were delivered to new hires and 18 employees were promoted. Over the same period, the annualised average staff turnover increased to 12.04% from 5.5% in the previous year. The rate is above the average across peers between 2014 and 2015. Fitch notes that the turnover is primarily across junior roles, and acknowledges that average industry experience and company tenure across staff remains stable. Fitch takes additional comfort from the fact that the staff is flexible and able to switch betweensecured and unsecured loan activities as required.
Over the past two years, Guber has continually developed its in-house internal audit (IA), risk and compliance functions, with a clearer segregation of roles and responsibilities, which benefit from experienced management. Policies and procedures are formalised and updated to accommodate the business activities as and when required. Guber's governance framework follows a risk-based approach. Fitch views the risk management as fully embedded and considers it comparable with highly rated peers.
As of 30 June 2015, Guber serviced a total of 136,165 loans (2014: 108,966). The secured portfolio consisted of 2,133 residential mortgage loans (2014: 1,999), 328 commercial mortgage loans (2014: 290) and 4,908 judicial mortgage loans on ABS assets (2014: 6,475). The unsecured portfolio consisted of 127,229 ABS loans (2014: 106,677), including small-ticket loans.
Fitch used its global servicer rating criteria to analyse the servicer's operations and financial condition, including a comparison against similar Italian servicers as part of the review process.
The analysis is based on information provided to Fitch by Guber.