Fitch Ratings has affirmed Prelios Credit Servicing’s Residential and Commercial Special Servicer Ratings at ‘RSS1-’ and ‘CSS1-’, respectively, and assigned Stable Outlooks. The affirmation follows Fitch’s review of Prelios’s business and operations, and reflects its robust defaulted loan management processes and controls, as well as its corporate governance structure, which are both in line with Fitch’s definition of ‘highest level of proficiency’.
Fitch’s report states Prelios Credit Servicing (PRECS) continues to meet its strategic objectives in its growth in UTP business: at end-September 2022, the UTP portfolio stood at EUR10 billion, up 28% from EUR7.8 billion at end-2020.
Fitch has stated that, in order to facilitate the growth in the UTP portfolio, Prelios Credit Servicing separated UTP loan management from the NPL workout teams and created a unit which is dedicated to managing UTP loans whose performance has deteriorated, leading to their reclassification to NPL.
Fitch scored Prelios’s company experience as commensurate with the ‘1’ rating category as per its Criteria for Rating Loan Servicers and remarks that Prelios’s senior and middle management have significant experience in servicing, banking and law - on average 25 and 19 years, respectively - and that Prelios Credit Servicing’s control framework follows the three lines of defence, which is considered industry best practice (Fitch assessed as commensurate with the ‘1’ rating category).
According to Fitch “Prelios’s processes and controls for defaulted loan management are well defined and remain commensurate with the ‘1’ rating category.” Prelios Credit Servicing “has sound IT systems, with separate servicing platforms for NPL and UTP management.”