Calculated risk

Determining the purchase price for a receivables portfolio is an EOS team effort. Always on hand: EOS Risk Management in Hamburg.

It is the bid price that helps to determine the success of a debt purchase. This is because the bidder with the highest offer generally wins. At the same time, the portfolio has to pay off for the buyer. At EOS, central Risk Management located at the headquarters in Hamburg, Germany, works closely with local companies worldwide in order to ensure that the optimal purchase price is achieved.

As Claus Wieland, Head of EOS Risk Management, states: ‘Nowadays, there is strong competition in every country. This is why it is important to carefully balance risks and opportunities when it comes to debt purchases.’ EOS Spain is a prime example. In the second half of 2015, the company acquired three receivables portfolios from the credit card and banking sector. In cases like these, Mr Wieland’s department and the company on location, that is EOS Spain, work hand-in-hand, with the EOS subsidiary transferring its country-specific expertise to the local market to devise ideal debt collection and titling strategies. The experts on location also forecast the predicted recovery success rates and associated costs, while considering the respective legal and economic conditions in their country.

Three bids, three contracts

The 14 experts at central Risk Management are solely tasked with the evaluating of portfolios. They use mathematical and statistical methods to assess the purchase price and the expected processing costs. Their analyses always take the local situation into consideration. If both sides come to different conclusions, they compare the data on which they based their calculations. ‘This is how our expert and local knowledge makes an amazing contribution to our company on location,’ says Mr Wieland. He knows this from experience: ‘There are no bad receivables portfolios, only inaccurate pricing.’

The decision to invest lies solely with the EOS Group Board of Directors. If the Board gives the green light, the subsidiary in question puts together an offer. EOS Spain ticked all the boxes with its portfolio and won the contract for each of the three bids (see: First hat trick).