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International Bureau of Credit Histories

International Bureau of Credit Histories. Principles of work Andry Kyyak (PhD), Head of Board, IBCH. KYIV June 2007. Economic results: background for banking sector growth. GDP of Ukraine . 1.01.2006 – 441 452 bln. UAH 1.01.2007 – 470157 bln. UAH GDP/person 1.01.2006 – 9372 UAH

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International Bureau of Credit Histories

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  1. International Bureau of Credit Histories Principles of work Andry Kyyak (PhD), Head of Board, IBCH. KYIV June 2007

  2. Economic results: background for banking sector growth GDP of Ukraine. 1.01.2006 – 441 452 bln. UAH 1.01.2007 – 470157 bln. UAH GDP/person 1.01.2006 – 9372 UAH 1.01.2007 – 9678 UAH Average salary 1.01.2006 – 1019 UAH 1.01.2007 – 1277 UAH CPI 2006 – 11,6% PPI 2006 – 14,1% Exchange rate – 1 USD-5,05 UAH

  3. Bank system • Quantity – 166 banks • The central Bank – National Bank in Ukraine • Concentration – first 10 banks 60% of assets I system; first 40 more 80% of assets in system

  4. Most popular retail loans • Auto loans • Mortgage loans • Loans in stores • Credit Cards • Loans for education

  5. Retail loans boom GDPon 01.01.2007 470, 157 bln. UAH Rate of growth : • 2007 F – 7% • 2008 F – 7% • 2009 F – 9% Loan portfolio on 01.01.2007 245,5 bln. UAH (rate of growth in 2006 72,57%) • 2007 F – 60% • 2008 F – 50% Retail loan portfolioon 01.01.200777 754 663 bln. UAH (rate of qrowth in 2006 134,51%) • 2007 F – 80% • 2008 F – 80% Mortgage loan portfolioon 01.01.2007 – 15 bln. UAH. (rate of growth in 2006 50%) • 2007 F – 70% • 2008 F – 70% Auto loans portfolioon 01.01.2007 – 13bln. UAH. (rate of growth in 2006 100%) • 2007 F – 80% • 2008 F – 80% Other retail (consumer loans)on 01.01.2007-34bln. UAH. (rate of growth in 2006 112,5%) • 2007 F – 90% • 2008 F – 80%

  6. Amount of applications (average) – quantity of reports – credit reports market size (physical persons) • Mortgage market 8-10% of households can take mortgage loan. Estimated amount of 1 loanis 100.000 UAH. Average quantity of application on mortgage loan 150.000 annually (2007-2008) • Autoloan 15-20% of households can take auto loan. Estimated amount of 1 loanis 75.000 UAH. Average quantity of application on mortgage loan 150.000-200.000 annually (2007-2008) • Retail loan (consumer) Average quantity – 6-7mln. Annually (2007-2008) On 1.01.2007 the total quantity of reports (with consent of client) – 5 mln. Taking into account the rate of growth of loan portfolios in 2009 on the market will be appr. 17-18 mln (incl. more than 1,5 mln. Reports from credit unions segment). Positive Reports (1,5-2 mln. – negative reports).

  7. Scoring Perspectives of increasing of different segments of retail market 60 Credits in the shops Credit Cards 50 Consumer Auto Mortgage loans Experts 40 forecasts of Overdraft increasing 30 during next year, Credits for 20 % per 2007 education 10 0 1 2 3 4 5 6 7 Segments

  8. Scoring Perspectives of different segments for banks Credits Mortgagee 8,00 in the Auto Credit Consumer shops 7,00 credits Cards Credits Overdrafts 6,00 for education Experts 5,00 estimation of 4,00 perspectives 3,00 by scale 1-10 2,00 1,00 0,00 1 2 3 4 5 6 7 Segments of retail market

  9. Average amount of credits (UAH) Auto - 53450 Real estate - 265000 As a rule 30% is “down” by individual and it is 70% value of flat Credits cards - 5250 There are differences for credit cards “for all” and for borrower for car or real estate (15000-20000 Hrn) Credits at the shops - 6437,5 Credits for education - 9500 Consumer loans 6000-10000 Depends from the notion “Consumer loan” in concrete bank

  10. Average time for credit arrangements • Auto 5-6 days • Real estate11-14 days (Min=4, Max=Month) • Credits cards 2 days (Min=1, Max=3) • Credits at the shops 1-1,5 hours • Credits for education 3-7 days Max=7 • Consumer loans 3 days From couple of hours to 5 days, depends from collateral

  11. Why to cooperate with bureau in Ukraine • Quantity of clients (physical persons) that never requested for credit more than 50% • Risk of default – appr.15% • Commercial risk – level of rejection average 35% • Rate of growth of bad loans in banking retail loans portfolio more than 100% • Bureau help to solve the problem with asymmetry of information and make the level of risk of default and rejection lower (5 and 10%)

  12. Legislative requirements • Special Law «About the organization of formation and reference of credit histories» from Junes, 23 th, 2005 #2704-IV • Licensing requirements were adopted by Ministry of Justice in 01.2007. (IBCH has the 1 License in Ukraine) • The supervision requirements will be adopted by MJ of Ukraine in the nearest time. • Cooperation with bureau and changing with the information from bank to bank is not the threat for banking secrecy (according to law) • Credit bureaus have a special data protection requirement

  13. Clients and Products • Bureaus can cooperate with: banks, credit unions, insurance companies • Special source of information are state registers • According to law bureaus can propose reports and scoring results

  14. Variants of development: Risks We examines the followings possible risks of success activity of bureau in Ukraine: • A financial risk - absence of necessary capital for operating activity • A strategic risk - unfunctioning of the system; uneffective connecting of partners • An operating risk – absence of work of personnel «On a result»

  15. IBCH This year IBCH (1th half of 2007) plans to complete connecting to the followings state registers: • Register of prohibitions (real estate) • Register of burdens (personal chattels) • Register of enterprises of Ukraine • Register of physical persons – taxpayers • Register of calculations for public utilities. • Register of the lost documents (possibly, by the end of the year) It will help IBCH to become yet on a level higher than the competitors and to get additional profits

  16. IBCH IBCH begins first from the bureau of Ukraine to inculcate the complex system of defence of information with parallel development of necessary internal procedures of defence of information (in 2007). It will help IBCH to purchase greater legal and transparent status at a collaboration with partners, registers.

  17. Calculation of size of base of Partners On 01.01.06 the volume of credit portfolio of banks of partners and potential partners made are 11,29 billions UAH On 01.01.07 the volume of credit portfolio of these banks made are 31,83 billions UAH A size of credit is 11 thousands UAH 80% borrowers gave a consent on transferring of data. 31,83-11,29=20,54 (billions UAH .) increase of portfolio. That makes about 1,867 million borrowers * 80% = 1,493 mln. records. 01.01.2006 01.01.2007 11,29 milliardUAH 31,83 milliardUAH Pluses: Growth of crediting – 30% Minuses: Presence of permissions of borrowers – 80% The same borrower – 20% The size of credit – 11 thousand UAH. 1,493 mln. records

  18. Introduction • CREDITINFO GROUP (CIG) • TAS FINACIAL GROUP (TAS) • NATIONAL ASSOCIATIONOF CREDIT UNIONS OF UKRAINE (NACUU) IBCH – BUREAU OF CREDIT HISTORIES IS ESTABLISHED IN UKRAINE BY THE THREE STRATEGIC PARTNERS: THE MAIN PURPOSE OF THE COMPANY IS TO PROVIDE THE MARKET WITH STANDARD CREDIT BUREAU REPORTING PRODUCTS AND SERVICES: • Credit reports with positive and negative data on individuals and companies • Credit bureau scoring model with statistic score card • In cooperation with CREDITINFO UKRAINE - credit risk management tools • To multiply the profitableness of business of his founders, become an effective profitable project, to occupy the considerable segment of market.

  19. Products and Services of IBCH IBCH works accordant governed requirements of Law of Ukraine «About the organization of formation and reference of credit histories» from Junes, 23 th, 2005 #2704-IV, with all of amendments and supplements, other legislative acts. • Credit reports for banks, credit unions, insurance companies and other creditors (6 credit reports (identification/personal, negative, classical, universal, modified and insurance) - in a mode of real time • Application and Credit bureau scoring • Application processing • Monitoring of clients for banks, credit unions, insurance companies and other creditors • Debt management is the recommended technology of increase of efficiency of method and process of punishment of debts. Jointly with Creditinfo • Information from state registers • Assistance to Bank at adaptation of legal base - Contracts and applications on the credit - by inclusion of the coordinated text of the client’s permission on transfer of the information to the Bureau; assistance at development of internal provisions of Bank that regulate interaction of work process with a Bureau of Credit Histories • Companies Database • Other products, developed specially to order of our clients IBCH was the 1 companies, which created Expert scoring card that we proposed to our clients

  20. Types of credit reports BLANK REPORT IS REPORT ABOUT CLIENT WHICH INCLUDE INFORMATION THAT ABSENT IN DATABASE OF CREDIT BUREAU + INFORMATION ABOUT THE AMOUNT OF QUERIES + SMALL ID INFO NEGATIVE REPORT CONTAINS ONLY NEGATIVE INFORMATION ABOUT CLIENT. THIS REPORT GETS THOSE PARTICIPANTS OF BUREAUS WHICH DO NOT GIVE POSITIVE INFORMATION FOR EXCHANGE CLASSICAL REPORT CONTAINS IDENTIFICATION INFORMATION, CURRENT NEGATIVE INFORMATION, AND ALSO SHORT INFORMATION ABOUT DEBTS OF CLIENT UNIVERSAL REPORT CONTAINS, BESIDES THE ABOVE ENUMERATED INFORMATION, CURRENT STATUS OF CLIENT ON PAYMENTS, ALSO INCLUDS HISTORICAL INFORMATION AND INFORMATION ABOUT POSITION OF BORROWER AS GUARANTOR OR CO-BORROWER MODIFIED REPORT CONTAINS INFORMATION ABOUT OTHER SUBJECTS, AND ALSO HISTORICAL INFORMATION ABOUT IDENTIFICATION DOCUMENTS AND LOCATION

  21. Reports and databases include

  22. Price policy The costs of credit reports are determined in the dollars of the USA on an individual scale To 2008 year scope prices on reports - Blank - 0.20 Negative - 4.0 Classical - 0.75 Universal - 1.5 Modified - 3.0

  23. Stages of cooperation • Signing of the Contract. • Reception of the engineering specifications. • To appoint the responsible persons from the Partner (IT-experts, experts on crediting and risks). Creation of working group in structure of experts of the Parties. • Connection to a Program Complex of the Bureau (for work in a on-line mode). • Creation of the communication module for work with system of the Bureau in a off-line mode. • Formations of data for transfer to the Bureau. • Testing of work of the system. • To appoint the corresponding structural divisions and the personnel of the Partner to which duties will be assigned to provide cooperation of the Parties. • Development of internal procedures for interaction with Bureau and their inclusion in own business-processes, acceptance of corresponding positions. • The coordination and signing of the Contract for granting information services.

  24. The order of introduction in Bank of work technology with «International Bureau of Credit Histories » Stage 1. The approval of the Order of Bank On introduction in Bank of the procedure with International Bureau of Credit Histories. Stage 2. Creation of group on introduction in Bank of work technology with IBCH and appointment of the Head of group. We recommend to include 4 or 5 persons in structure of group : • The representative of Department (management / department) retail crediting (it is recommended to appoint as the Head of group because the given Department will be, in themain , the consumer of IBCH services); • The representative of Department (management / department) risk-management of Bank; • The representative of Department (management / department) information technologies; • IBCH representatives (the expert on work with Banks and the expert on information technologies).

  25. A procedure of applying the technology of work with “International Bureau of Credit Histories” in banks Stage 3.Carrying out preparatory work in the bank for the beginning of testing of the work with IBCH, organization of testing and instruction in technology of working with the bureau of the corresponding bank employees. 3.1. Determination of the executive officers, who will be authorized to make inquiries ant to receipt credit histories of the bank clients; 3.2. Determination of working places, where (technically) an inquiry and receipt of the credit history can be made; 3.3. To determine, develop and adjust the technology of work with credit reports in the bank; 3.4. To confirm regulations of work of the bank with IBCH; 3.5. To develop the technology of preparation of information for forwarding it to IBCH, including the procedure of carrying the consent of the client to provide the data to IBCH; 3.6. To develop and confirm instructions for the corresponding groups of the bank specialists; 3.7. To provide instruction of the bank’s personnel, that takes part in the work with the bureau.

  26. A procedure of applying the technology of work with “International Bureau of Credit Histories” in banks Stage 4. Experimental-industrial exploitation of the work of the bank’s system with IBCH(Period – from 1-3 weeks) 4.1. Carrying out of the experimental-industrial exploitation of the system. 4.2. Drawing up a report on acceptance of the system to industrial exploitation with a list of remarks and defects (in the system, in technology, in documents), discovered during the work with system in experimental-industrial period and terms of revision and correction of this defects. 4.3. Drawing up a report on acceptance of the system to industrial exploitation. Stage 5. Approval of the bank’s order to apply the system of the work with IBCH to the industrial exploitation. Stage 6. To develop and confirm the technology and payment for the services of IBCH.

  27. Sequence of work in front-office of the IBCH system Open the pagehttps://secure.credithistory.com.ua/FrontOffice/ After loading supply login and password, and then press “Enter”

  28. Scoring Perspectives of increasing of different segments of retail market 60 Credits in the shops Credit Cards 50 Consumer Auto Mortgage loans Experts 40 forecasts of Overdraft increasing 30 during next year, Credits for 20 % per 2007 education 10 0 1 2 3 4 5 6 7 Segments

  29. Scoring Perspectives of different segments for banks Credits Mortgagee 8,00 in the Auto Credit Consumer shops 7,00 credits Cards Credits Overdrafts 6,00 for education Experts 5,00 estimation of 4,00 perspectives 3,00 by scale 1-10 2,00 1,00 0,00 1 2 3 4 5 6 7 Segments of retail market

  30. Filling in a form for credit, written consent on forwarding the information to the Bureau Refusal in crediting, recommendation to have a guarantor Borrower Giving a credit Signing an agreement, written consent on forwarding the information to the Bureau Receiving of periodical payments from the borrower Front-office of the Bank Processing of the form, forming of documents Risk-management In the case of written consent Following the internal procedures, a decision on the further actions is made - to give a credit at once, выдача в месте обращения за кредитом, to submit to a credit committee. Decision: no Forwarding the identificator to the authorized specialist of the IT department Forming of file and forwarding the data to the IBCH system Forming of file and forwarding the data to the IBCH system Back-office of the Bank (IT department) yes Receiving of the data, analysis and report on receiving Receiving of the data, analysis and report on receiving Exit,search, receipt of the report IBCH system Questions on the work of the system Readiness to help Partners on every stage of crediting Front-office of IBCH Back-office of IBCH Control over the receiving of the data, permanent support of the users

  31. IBCH – market share • On March 2007 IBCH had a 22 signed contracts with banks, credit unions and insurance companies • Till end of the year IBCH will cover more than 30% of market • Till end 2008 – more than 50% of market

  32. Партнери Бюро станом на 1червня 2007 року Банки: ТОВ «Укрпромбанк» ТОВ «Банк ренесанс-капітал» ТОВ «Актив –Банк» АБ «АВТОЗАЗБАНК» Банк НРБ ЗАТ «Родовід банк» ТАС –Комерцбанк ТАС –Інвестбанк КБ «Бмбанк» Ва-Банк OTP – Банк КБ ТОВ «Місто Банк» КБ «Євробанк». Экспобанк ВАТ «Донгорбанк»

  33. Страхові та Лізингові компанії • СК «АСКА» • ЗАТ «Європейський страховий альянс» • Страхова Група ТАС • Страхова компанія ТАС • ТОВ «Євро-лізинг» • Асоціація лізингодавців України

  34. Кредитні спілки • КС «Фортеця» • КС «Азовська кредитна Компанія» • КС «Перше кредитне товариство» • КС «Гільдія підприємців Донбасу» • КС «Інвесткапітал» • КС «Карат»

  35. Організації, якими прийнято рішення про співпрацю • Індустріал –Банк • Банк «Руський Стандарт» • Укрсиббанк • ПУМБ • Індекс – банк • Морський транспортний банк • КС «Кредит плюс»

  36. Партнери, які повністю готові до промислової експлуатації • ТОВ «Євро-лізинг» • ТОВ «Укрпромбанк» • КС «Азовська кредитна Компанія» • КС «Перше кредитне товариство» • ЗАТ «Родовід банк» • ТАС –Комерцбанк • ТАС –Інвестбанк • OTP – банк • КС “Фортеця” • КБ “БМ Банк” • АКБ “АвтоЗАЗбанк”

  37. THANK YOU www.credithistory.com.ua

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