S&P Global Ratings' Europe, Middle East, and Africa (EMEA) servicer evaluation industry report provides an annual summary of our ranking activity and the servicers that we rank. The servicers typically manage portfolios of loans and other credits on behalf of third parties (such as financial institutions, investors, or special-purpose entities [SPEs]); their own portfolios; and/or a combination of the two.
Servicers can manage performing loans (primary servicers) or nonperforming loans (NPLs; special servicers), or they can monitor other servicers' activity (master servicers). Many servicers supply a wider range of corollary services, which are excluded from our analysis. We only take these activities into account if we consider that they could affect the servicing activities that we rank.
The information in table 1 is current as of June 2017.
Ranking Activity In 2017
New ranking activity
In 2017, we assigned five new rankings, assessing one U.K. servicer for the first time, as follows:
- We assigned one new ranking to Hipoges Iberia S.L. (Hipoges) as a special servicer of commercial loans in Spain.
- We assigned four new rankings to Pepper (UK) Ltd. (PUK) as a primary and special servicer of residential and commercial mortgages in the U.K.
Surveillance ranking activity
We constantly monitor the activity of ranked servicers to detect any developments that could trigger a ranking or outlook update; we formally review our assessment on a periodic basis. In 2017, we have taken the following actions:
- We affirmed 37 rankings;
- We assigned five new rankings; and
- We raised five rankings.
Outstanding rankings
Our rankings have historically been concentrated in the U.K. and Italy. In 2017, we assigned new rankings in the U.K. and observed the growth of nonperforming loans (NPLs) servicer activity in Italy.
As of December 2017, we provided 79 rankings for 29 servicers:
- Thirty rankings are in Italy: four as primary servicers, 14 as special servicers, and 12 as master servicers.
- Twenty-eight rankings in the U.K.: 14 as primary servicers and 14 as special servicers.
- Twelve rankings in Ireland: seven as primary servicers, four as special servicers, and one as a master servicer.
- Four rankings in Spain as special servicers.
- Four rankings in Germany: one as a primary servicer and three as special servicers.
- One ranking in Portugal as a special servicer.
Withdrawn rankings
We withdrew our rankings on Computershare Loan Services HML (CLS HML), formerly HML, as a special servicer of residential mortgages in Ireland and on Savia Asset Management S.L. as a special servicer of residential and commercial mortgages in Spain at the clients' request.
Most Relevant Changes In 2017
As anticipated, the servicing industry in Europe witnessed further consolidation in 2017. At the same time, the majority of servicers that we rank expanded in line with relevant market opportunities.
NPLs remained the hot commodity in 2017, with Italy leading the pack
In 2017, the amount of NPL assets across Europe decreased following actions taken to resolve them and the positive economic scenario registered in most European countries. Nonetheless, NPLs still accounted for almost €900 billion in the region and market players remain highly interested in this product.
Over the same period, the servicing sector grew in countries where NPL sales materialized, as investors or SPEs that purchased the assets engaged third-party servicers to manage them on their behalf. Similarly, we expect the servicing sector to grow further in countries where new (or delayed) NPL sales occur in 2018.
Among the jurisdiction where the servicers that we rank operate, Italy experienced the largest sector growth, accounting for the highest NPL sales in Europe in 2017. Moreover, over this period, new entrants as well as outstanding servicers expanded through acquisitions of other servicing platforms in Italy. Among the servicers we rank:
- Arrow Global Group PLC completed its acquisition of Zenith Service SpA;
- Italfondiario SpA, part of the doBank SpA Group, sold its subsidiary Gextra S.r.l. to Intrum Justitia AB Group;
- Intrum also acquired CAF SpA later in the year;
- Credito Fondiario SpA signed a binding agreement to acquire Banca Carige SpA's servicing platform; and
- Davidson Kempner Capital Management LP acquired 44.86% of Prelios SpA's capital, which is Prelios Credit Servicing SpA's parent.
This trend may help servicers achieve wider synergies of scale and scope and/or receive a more extensive support from the new parent company to favor their growth or efficiency gains. In our view, the Italian NPL market will continue to offer the largest growth opportunity in 2018. Italian NPLs account for almost a third of the total in Europe and up to €70 billion could be traded before the end of 2018.
Further capital control changes
In the U.K., Mount Street Loan Solutions LLP's (MSLS) executive team completed a management buy-out in February 2017, establishing MS Group as a legal entity, with two strategic partners who hold a minority stake. The group continues to grow following the acquisition of Erste Abwicklungsanstalt Portfolio Advisers GmbH in October 2017, renamed Mount Street Portfolio Advisers GmbH (MSPA). MSLS and MSPA are separate legal entities that sit under the MS Group structure. While they share executive management and certain support functions at group level, their operations remain segregated and there is no plan to integrate IT systems.
In November 2017, Link Group, which provides fund administration, share registration, and related services worldwide, acquired the Capita Asset Services Ltd. (CAS) division from Capita PLC. The division now comprises Asset Services (Ireland) Ltd. and Asset Services Ltd. (U.K. and London), collectively described as AS, which are the group entities working as master, primary, and special servicers of residential mortgages in Ireland and commercial mortgages in the U.K. The division also includes Link Mortgage Services (LMS), previously known as Capita Mortgage Services Ltd., which manages residential mortgages and small balance commercial mortgages in the U.K.
In December 2017, KKR Credit Advisors (US) LLC (KKR), a global investment firm, acquired Pepper Group, which includes Pepper Finance Corp. (Ireland) DAC, T/A Pepper Asset Servicing, and PUK. KKR also took a majority position in the capital of Hipoges, yet Hipoges' management team retains equity interests in the company ensuring the leadership continuity.
European servicers take action to stay ahead in the game
Regarding operational enhancements, we expect the servicers we rank to implement changes in 2018 to meet the EU's General Data Protection Regulation (GDPR), which will come into force on May 25, 2018, as it will apply to their business. This new regulation will govern the use and handling of personally identifiable information for EU citizens.
Moreover, the more proactive servicers are implementing further IT developments to strengthen the aspects of the loan management system related to cybersecurity, automation, and the ability to report data more efficiently. We expect these trends to become common across the majority of market participants to gain profitability and meet ever-demanding clients' requests, enhancing competitiveness.
In our opinion, the European servicing industry will register further acquisition and consolidations in 2018, paired with technological developments across assets and jurisdictions.
Table 1
| EMEA Servicer List | |||
|---|---|---|---|
| Servicer name | Servicer type | Asset class | Comments |
| Germany | |||
|
Hudson Advisors Germany GmbH (HAG) |
Primary and special servicer | Commercial mortgages | Based in Frankfurt, HAG is a subsidiary of Hudson Advisors LP (HA). HA manages a range of assets in different market roles on behalf of Lone Star Funds. HAG, as a servicing operation, is supported by the regional functions based in London and Dublin. As of June 2017, HAG employed 39 employees in Germany managing a total portfolio of approximately €3.0 billion, including a commercial mortgage portfolio of €816 million, €139 million of which is related to German-only commercial mortgages. |
|
Lowell Financial Services GmbH (Lowell Germany) |
Special servicer | Asset finance | Lowell Germany, previously known as GFKL Financial Services GmbH, is a group that supplies collection and loan management services in Germany. In 2015, a private equity firm, Permira Holdings Ltd. acquired the majority share of the capital of GFKL and Lowell Group Ltd., another U.K. servicer, to create the European Lowell Group, which provides special servicing of unsecured credits. Since end of September 2016, the German group comprises 10 operative subsidiaries. As of June 2017, Lowell Germany employed 861 staff members in Germany working on a total portfolio of €18.3 billion of gross book value. Proceeds Collection Services GmbH and Sirius Inkasso GmbH together manage the largest part of the overall Lowell Germany portfolio. Our rankings only apply to them. Proceeds Collection Services works for financial institutions and banks on consumer loans. As of the end of June 2017, 159 staff members managed a total portfolio of €12.0 billion. Sirius Inkasso manages small credits primarily for insurance companies for a total portfolio of €1.169 billion, managed by 203 employees. |
|
Solutus Advisors Germany GmbH (Solutus) |
Special servicer | Commercial mortgages | Solutus was incorporated as a special servicer of commercial mortgage loans in the U.K. in late 2010. In 2012, Solutus opened a new office in Frankfurt. As of June 2017, Solutus' total commercial portfolio in Germany accounts for €300 million, which is managed by one loan manager who receives full support from the team based in London. |
| Ireland | |||
|
Acenden Ltd. (Acenden ROI) |
Primary and special servicer | Residential mortgages | In 2015, The Blackstone Group L.P. and TPG Specialty Lending Inc. acquired control of Acenden's capital. Starting in 2016, Acenden became part of the Northview Group, together with two lenders, Kensington Group Ltd. and New Street Mortgages. As of October 2017, Acenden ROI was granted authorization from the Central Bank of Ireland to operate as a separate legal entity to meet the new Irish regulation on servicers, currently in transition. Acenden ROI acts as primary and special servicer for Irish residential mortgages managed by 28 staff members working from its Dublin office. As of June 2017, Acenden ROI managed €1.17 billion of Irish residential mortgages, of which 37% is performing loans. |
|
Asset Services (Ireland) Ltd. (AS; part of Link Group ) |
Primary, special, and master servicer | Commercial and residential mortgages | AS, previously known as Capita Asset Services Ltd (CAS), was acquired by Link Group, which provides fund administration, share registration, and related services worldwide, from Capita PLC in November 2017. Asset Services (Ireland) and Asset Services (U.K. and London) (collectively described as AS) are the group entities working as master, primary, and special servicers. As of the end of June 2017, the AS Irish portfolio comprises €65.2 billion. This includes €61.7 billion of commercial mortgages, of which it managed €23 billion as master servicer and €3.5 billion were residential mortgages. The Irish master servicing team comprises 10 employees and 493 staff comprise the primary and special servicing team. |
|
Computershare Loan Services (CLS HML; formerly HML) |
Primary servicer | Residential mortgages | CLS HML provides third-party mortgage services, including loan administration, to banks and other lenders. It is part of Computershare Loan Services (CLS), which is a subsidiary of Computershare Ltd. (CS), an Australian listed financial services company with a worldwide presence. CS established its mortgage services operation in the U.K. and Ireland in 2014 following the acquisition of HML. In mid-2016, CS began administering U.K. Asset Resolution (UKAR)'s mortgages, becoming the leading third-party mortgage servicer in the U.K. and Ireland with almost £60 billion of assets under management. Its mortgage services operation has a single set of supporting functions and business goals under one executive team, and the integration of the systems and servicing models inherited from HML and UKAR is underway. HML still exists as a purely administrative entity and remains the specific subject of our review. As of June 2017, CLS HML managed a total portfolio of €1.63 billion of performing residential mortgages. |
|
ORIX Aviation Systems Ltd. (OAS) |
Primary servicer | Asset finance | OAS is a wholly owned subsidiary of ORIX Corp., which is a financial services group based in Tokyo operating in over 40 countries worldwide. OAS is an owner of aircraft, a lessor, and an asset manager for aircraft leases and aviation-related investments. As of June 2017, the OAS team comprised 57 staff managing a total portfolio in excess of 165 aircraft, with over 70 clients. |
|
Pepper Finance Corp. (Ireland) DAC T/A Pepper Asset Servicing (PAS) |
Primary and special servicer | Residential and commercial mortgages | PAS is part of Pepper Group, which delisted from the Australian Stock Exchange in December 2017 following its acquisition by KKR Credit Advisors (US), a global investment firm. As of June 2017, PAS employed approximately 386 staff. The size of the operative teams for residential and commercial mortgages is 131 staff (21 in primary servicing) and 67 staff (10 in primary), respectively. Over the same period, the teams managed assets totaling €16.5 billion, comprising €8 billion of residential mortgages (of which 88% are performing), and €5.6 billion of commercial mortgages (4% performing). PAS also managed €2.9 billion of unsecured loans, which are outside the scope of our assessment. |
| Italy | |||
|
CAF SpA (CAF) |
Special servicer | Residential mortgages and asset finance | Established in 2004 as an independent servicer, CAF was controlled by Lone Star Funds, a U.S. private equity firm, since May 2015 until December 2017 when Intrum, a leading credit management service provider in Europe acquired it. CAF works as a servicer managing several asset classes. However, we only rank it as a special servicer of residential mortgages and consumer credits. CAF also supplies pricing, due diligence advisory, and real estate evaluation services to investors and Italian banks. CAF's staff totals 205 people based in Rome, Milan, and Orte, of which 154 work in the special servicing team, 73 on secured loans (38 dedicated to residential mortgages), and 81 work on unsecured loans. As of June 2017, CAF manages a total portfolio of €7.6 billion, including €1.413 billion of Italian residential mortgages and €4.377 billion of unsecured credits. |
|
Credit Network & Finance SpA (CNF) |
Special servicer | Asset finance | CNF is a special servicer established in 2007 and initially focused on the collection of defaulted debt related to non-life insurance policies. In 2012, it expanded into the banking sector as a special servicer of consumer credits. The company has offices in Verona, Milan, and Benevento. As of June 2017, CNF's insurance-related debt portfolio accounted for an outstanding balance of €118 million, while the consumer credits portfolio accounted for €2.74 billion. The company's workforce comprises 161 staff working in the insurance and consumer loans related operations. |
|
Credito Fondiario SpA (CF) |
Primary and master servicer | Residential and commercial mortgages and asset finance | CF is a bank that provides primary, special, and master servicing activity. Our ranking is limited to its primary activity on residential and commercial mortgages and master servicing activity on secured and unsecured credits. Since 2013, Tages Holding SpA and some senior managers have retained control of the bank. As of June 2017, the workforce comprised 122 employees, who manage a total portfolio of €13.1 billion in master servicing of which almost €922 million is performing commercial loans. As of June 2017, the bank had €2.2 billion of assets under special servicing. The special and master servicing teams have 33 and 18 employees, respectively. |
|
doBank SpA (doBank) |
Special servicer | Residential and commercial mortgages and asset finance | doBank is part of the doBank Group, which as the biggest Italian servicing group services an overall portfolio of about €79 billion. The group was listed on the Italian stock exchange in 2017. Established in 1999 as a special servicer within UniCredit Group SPA, doBank was acquired by Fortress Investment Group LLC (FIG) in 2015. In July 2016, doBank obtained the control of Italfondiario (the largest servicer in Italy and formerly owned by other FIG affiliates) creating the doBank Group. As of June 2017, doBank managed a total portfolio of €31.11 billion in nonperforming loans and employed 622 staff members, of which 528 worked in the special servicing team. Of the overall portfolio, 27% comprises residential mortgages, 68% commercial loans, and 5% unsecured loans. |
|
FBS SpA (FBS) |
Special servicer | Residential and commercial mortgages and asset finance | FBS was founded in 1997 by the current CEO and other finance executives, some of whom remain as senior managers and minority shareholders. FBS is an independent organization managing several asset classes. FBS owns FBS Real Estate SpA, which provides real estate advisory services for external players and the parent company. Its 128 employees, comprised of 87 operative staff, are located in Milan and two operative branches in Ravenna, north Italy, and Bari, south Italy. As of June 2017, FBS managed a total portfolio of €8.06 billion, 77% of which is unsecured. |
|
Italfondiario SpA (Italfondiario) |
Primary and special servicer | Residential and commercial mortgages | Italfondiario is one of the largest Italian servicers of performing and nonperforming loans. In October 2016, Italfondiario became part of the listed doBank Group, which is the biggest Italian servicing group by assets under management. In addition, Italfondiario avails itself with specialized group companies, such as doRealEstate, doSolutions, and Italfondiario Business Information Service (IBIS), thereby offering its clients a fully integrated suite of services, including collection, recovery, real estate services, and due diligence. As of June 2017, the servicer had an overall portfolio of approximately €37.7 billion, managed by 315 operative staff out of a total workforce of 387, on behalf of Italian banks and international investors. This includes €9.29 billion under our assessment, of which 57% are residential mortgages and 43% commercial loans. Italfondiario also manages €28 billion of consumer loans, which are beyond the scope of our assessment. |
|
Prelios Credit Servicing SpA (PCS) |
Special and master servicer | Residential and commercial mortgages and asset finance | PCS is the servicing subsidiary of Prelios SpA and part of the Prelios Group, which offers real estate services. PCS is a special and master servicer of residential mortgages, commercial mortgages and unsecured loans, and also manages nonsecuritized portfolios. It operates its servicing platform through a central function in Milan and has a branch in Rome. As of June 2017, the servicer managed a total portfolio of €8.30 billion, €1.85 billion related to cases managed as both master and special servicer, and employed 68 staff members. The company employed 27 staff over the same period to manage €3.98 billion of assets under special servicing, including €1.571 billion of asset finance loans (which are beyond the scope of our assessment as special servicer), €1.722 billion of commercial loans, and €688 million of residential mortgages. As a master servicer, 10 employees managed a total portfolio of €6.18 billion, which comprises €2.155 billion of asset finance loans, €1.935 billion of commercial loans, and €2.086 of residential loans. |
|
Securitisation Services SpA (SecServ) |
Master servicer | Residential and commercial mortgages and asset finance | Established in 2001, SecServ is an Italian company that undertakes third-party master servicing for securitizations and performs a number of other roles, including primary servicer, computation agent, corporate servicer, and noteholder representative. SecServ is part of Banca Finanziaria Internazionale S.p.A. and employs 115 staff members. As of June 2017, the company managed 125 transactions accounting for a total portfolio of €37.8 billion. A team of 26 employees managed 104 transactions as master servicer accounting for a master serviced portfolio of €35.5 billion, including €9.014 billion of residential mortgages, €0.547 billion of commercial mortgages, and €25.903 billion of consumer loans. |
|
Zenith Service SpA (Zenith) |
Master servicer | Residential and commercial mortgages and asset finance | Established as an independent company in 1999, Zenith was acquired in April 2017 by Arrow Global Group, a debt purchaser and manager. Since its incorporation, the company has participated in various transactions as a primary, special, and master servicer, and more recently as a backup servicer. Our ranking relates exclusively to the company's master servicing activity. At the end of June 2017, Zenith employed 88 staff, including 13 working in the master servicing team. The servicer managed a total master serviced portfolio of over €17 billion: €15.3 billion comprised consumer finance, €1.07 billion commercial loans, and €0.655 billion residential mortgages. |
| Spain | |||
|
Aktua Soluciones Financieras S.L.U. (Aktua) |
Special servicer | Residential mortgages | Aktua is an asset management company providing a wide range of services, including portfolio valuation and pricing, loan servicing, and real estate asset management, including commercialization and sales. Established in 2008 as a subsidiary of Banesto (now part of Santander S.A.), it was bought by Centerbridge Partners, a private equity fund, in 2012 and subsequently sold to Lindorff Iberia Holding, S.L.U. in 2016. In June 2017, Lindorff and Intrum combined, creating the largest credit management company in Europe. Currently, Aktua operates from 23 offices located all over Spain and employs 530 staff members. As of June 2017, Aktua managed a total portfolio of €9.33 billion, accounting for more than €3.95 billion of nonperforming residential mortgages and €2.96 billion of repossessed residential properties, which is the scope of our assessment. The residential mortgages special servicing team is comprised of 431 staff members. The company serves financial institutions, investors, and private and public entities in Spain. |
|
FinSolutia S.A. (FS) |
Special servicer | Residential mortgages | FS is an independent company supplying a variety of services to support asset management, from portfolio due diligence to repossessed properties management in Portugal and Spain. The Portuguese and Spanish branches manage assets independently within their own jurisdictions, but share senior management teams, supporting functions, and IT platforms. As of June 2017, 86 staff managed (46 in the residential special servicing team) the overall Spanish portfolio accounting for €1.458 billion, including €498 million of defaulted residential mortgages and repossessed properties. The company also manages corporate loans outside the scope of our assessment. |
|
Hipoges Iberia S.L. (Hipoges) |
Special servicer | Residential and commercial mortgages | Founded in 2008, Hipoges is an asset management company providing a wide range of services all along the investment cycle in Spain and Portugal. A stable executive team has led the company since inception. KKR also took a majority position in Hipoges' capital. However, the latter's management team retains equity interests in the company, ensuring leadership continuity. Hipoges' primary business is servicing portfolios of distressed debt and real estate assets. As of June 2017, Hipoges' overall Spanish portfolio accounted for €5.2 billion of gross book value, comprising secured and unsecured credits including residential mortgages, corporate and small and midsize enterprise loans, commercial real estate, unsecured loans, and a real estate-owned portfolio. Of a total Spanish staff of 175, 58 manage residential mortgages and 43 manage commercial mortgages. The Spanish specially serviced residential mortgages portfolio accounts for €1.02 billion of gross book value and the Spanish specially serviced commercial portfolio accounts for €2.49 billion of gross book value. |
| Portugal | |||
| FinSolutia S.A. (FS) | Special servicer | Residential mortgages | FS is an independent company supplying a variety of services to support asset management, from portfolio due diligence to repossessed properties sale in Portugal and Spain. The Portuguese and Spanish branches manage assets independently within their own jurisdictions but share senior management teams, supporting functions, and IT platforms. As of June 2017, the overall Portuguese portfolio accounted for €0.347 billion, including €0.264 billion of residential mortgages and repossessed properties, managed by 52 overall staff, of which 19 exclusively focused on the residential specially serviced portfolio. |
| U.K. | |||
|
Acenden Ltd. (Acenden UK) |
Primary and special servicer | Residential mortgages | In 2015, The Blackstone Group and TPG Specialty Lending acquired control of Acenden's capital. Starting in 2016, Acenden is part of the Northview Group, together with two lenders, Kensington Group and New Street Mortgages. Acenden UK acts as primary and special servicer for U.K. residential mortgages managed by 271 staff members working from its offices in Maidenhead and London. Of those, 90 and 97 staff compose the primary and special servicing teams, respectively. At the end of June 2017, Acenden UK's total U.K. portfolio accounted for £9.806 billion, of which 79% was performing loans. |
|
Asset Services Ltd. (AS; part of Link Group ) |
Primary and special servicer | Commercial mortgages | AS, previously known as Capita Asset Services Ltd. (CAS), was acquired by Link Group, which provides fund administration, share registration, and related services worldwide, from Capita PLC in November 2017. Asset Services (Ireland), Asset Services (U.K. and London) (collectively described as AS) are the group entities working as master, primary, and special servicers. At the end of June 2017, AS' headcount across the U.K. comprised 59 employees. Over the same period, the U.K. commercial portfolio for which we rank it comprised £14.8 billion. |
|
CBRE Loan Services Ltd. (CBRELS) |
Primary and special servicer | Commercial mortgages | Established in 2005, CBRELS is a primary and special servicer of European commercial loans. CBRELS is part of the CBRE Group, which is one of the largest commercial real estate services firms in the world, with over 400 offices in more than 100 countries. As of June 2017, 30 CBRELS staff members managed a total pan-European portfolio of performing and nonperforming commercial loans, with a gross book value of £21.18 billion, from three servicing centers: its head office in London and two more offices in Madrid and Frankfurt. As of June 2017, CBRELS had a U.K. primary servicing portfolio of £11.24 billion and a U.K. special servicing portfolio of £0.65 billion. |
| Computershare Loan Services (CLS HML; formerly HML) | Primary and special servicer | Residential mortgages | CLS HML provides third party mortgage services, including underwriting support, to banks and other lenders in the U.K. and Irish markets. CLS HML is part of CLS, which is a subsidiary of CS, an Australian listed financial services company with a worldwide presence. CS established its mortgage services operation in the U.K. and Ireland in 2014 following the acquisition of HML. In mid-2016, CS acquired UKAR becoming the leading third-party mortgage servicer in the U.K. and Ireland with almost £60 billion of assets under management. Its mortgage services operation has a single set of supporting functions and business goals under one executive team, and the integration of the systems and servicing models inherited from HML and UKAR is underway. HML still exists as a purely administrative entity and remains the specific subject of our review. As of June 2017, CLS HML employed about 776 staff working on shared functions, including 296 and 96 people in the primary and special servicing teams, respectively. Over the same period, CLS HML managed a total U.K. portfolio of £26.2 billion including 87% performing residential mortgages. |
|
Hudson Advisors U.K. Ltd. (HAUK) |
Primary and special servicer | Commercial mortgages | HAUK is a subsidiary of Hudson Advisors LP (HA), which was established in 1995 with headquarters in Dallas, Texas. The HA group manages a range of assets in different roles exclusively on behalf of Lone Star Funds. HAUK's servicing operation is based in central London and is supported by regional functions based in Frankfurt and Dublin. As of June 2017, HAUK employed 93 staff members in the U.K. managing a total portfolio of approximately £13.88 billion, including a commercial mortgage portfolio of £3.91 billion, £1.56 billion of which related to U.K.-only commercial mortgages. |
|
Link Financial Outsourcing Ltd. (LFO) |
Primary and special servicer | Asset finance | LFO is the U.K. servicing arm of the Link Financial Group (LFG) founded in London in 1998. LFG manages an overall portfolio of over €25 billion in the U.K., Germany, Spain, Italy, Ireland, and Portugal. As of June 2017, LFO managed a portfolio of £4.78 billion, comprising 19% performing and 81% nonperforming loans, and corresponding to 1,339,755 accounts. LFO employs 300 overall staff and services assets across a wide product range, including unsecured consumer loans, motor loans and hire purchase, asset finance, credit cards, student loans, and mortgage products. LFG also provides backup servicing via LFO to third-party structured finance arrangements or directly to originators. |
|
Link Mortgage Services Ltd. (LMS) |
Primary and special servicer | Residential and small-balance commercial mortgages | Established in 1988, LMS, previously known as Capita Mortgage Services Ltd., manages a wide range of loan types including residential first and second charges, buy-to-let first and second charges, housing association mortgages, bridging and developer finance, commercial, equity release, and shared equity mortgages on behalf of lenders and investors across both performing and nonperforming assets. Outside the scope of our review, LMS also carries out underwriting activities for two buy-to-let lenders. Formerly part of Capita PLC, the company is part of Link Group since November 2017. Link Group is the largest provider of services in Australia's fund administration industry. As of June 2017, LMS managed loans totaling £5.2 billion and employed 180 overall staff. Of those, 13 staff managed £1.08 billion of commercial portfolio (of which £989 million was performing) composed by small- to medium-sized mortgages. The residential operations team of 69 managed £4.103 billion of residential loans (of which £3.411 billion was performing). |
|
Mount Street Loan Solutions LLP (MSLS) |
Primary and special servicer | Commercial mortgages | MSLS was incorporated in December 2012. Headquartered in London and with nine offices worldwide, MSLS specializes in loan servicing, facility agent and security trustee roles, nonperforming loan underwriting and due diligence, surveillance reporting, restructuring, and work-outs across Europe and the U.S. As of June 2017, MSLS employed 50 staff, composed of 18 primary servicing and 10 special servicing employees managing a portfolio of almost £13 billion of pan-European commercial real estate debt (both securitized and balance sheet positions), including £8.33 billion in the U.K., of which 99% are performing loans. |
|
Pepper (UK) Ltd. (PUK) |
Primary and special servicer | Residential mortgages and Commercial mortgages | PUK is part of Pepper Group, which delisted from the Australian Stock Exchange in December 2017 following its acquisition by KKR Credit Advisors (US), a global investment firm. PUK is a loan servicing specialist in the U.K. It manages performing and nonperforming loans on behalf of investors and lenders. The company services a wide range of assets, including residential home loans through the Engage Credit trading name, commercial loans through the Engage Commercial trading name, and consumer finance. The company also originates residential and buy-to-let mortgages. It is part of the Pepper Group, which offers lending, loan servicing, and asset management services in several jurisdictions. PUK receives relevant support from its parent company, but also retains some independence regarding its business strategy and the management of its operations. As of June 2017, PUK employed approximately 323 staff, of which 131 work in the residential team and 46 in the commercial servicing team. Its overall portfolio was £10.6 billion as of June 2017 including £9.06 billion of residential mortgages, of which 90.4% were performing, and £1.27 billion of commercial mortgages (33.3% performing). |
|
Solutus Advisors Ltd. (Solutus) |
Special servicer | Commercial mortgages | Solutus was incorporated as a special servicer of commercial mortgage loans in late 2010. As of June 2017, Solutus managed a total pan-European commercial portfolio of £1.813 billion, of which £0.988 billion and £0.474 billion of U.K. loans are in primary and special servicing, respectively, from its London and North West office. The portfolio is managed by 12 staff, of which two work on special servicing. |
|
Target Servicing Ltd. (Target) |
Primary and special servicer | Residential mortgages and asset finance | Target is the FCA-regulated business outsourcing subsidiary of Target Group Ltd., a supplier of lending and mortgage software and service solutions in the U.K. In May 2016, Tech Mahindra, a global multinational specialist in digital transformation, acquired Target Group. Target's principal location is Newport, South Wales, and it also has an operational office in Chester. The company services various clients as a primary and special servicer on both secured and unsecured loans including commercial assets, which are outside the scope of our review. Target utilizes its own IT software solutions, which it also provides as a stand-alone product. As of June 2017, it employed 997 staff. Of these, 364 servicing employees managed a total loan portfolio of £11.4 billion. Residential mortgages represent 95% of the portfolio, while the remaining part are consumer credit loans. Target also services £2.2 billion of commercial loans and £3.0 billion of investment savings products, both being outside the scope of our assessment. |
|
Wells Fargo Commercial Mortgage Servicing (WFCMS) |
Primary and special servicer | Commercial mortgages | WFCMS is the fully owned commercial real estate servicing branch of Wells Fargo Bank N.A., which is among the largest corporations in North America, providing banking, insurance, investment, and finance services at the global level. WFCMS has expanded its European servicing business, in which it has been active since 2006, following the acquisition of Hypotheken Bank's commercial U.K. assets in 2013. As of June 2017, WFCMS managed €1.15 billion of U.K. commercial mortgages. It has three London-based employees who are fully supported by global operations, which comprises more than 900 staff worldwide. |
Related Criteria And Research
Related Criteria
- Revised Criteria For Including RMBS, CMBS, And ABS Servicers On Standard & Poor's Select Servicer List, April 16, 2009
- Methodology For Evaluating And Ranking Small-Balance Commercial Mortgage Servicers, July 23, 2007
- Servicer Evaluation Ranking Criteria: U.S., Sept. 21, 2004
Related Research
- Select Servicer List, Nov. 3, 2017
- EMEA Servicer Evaluation Industry Report 2016, Jan. 31, 2017
- Italian Servicers Could Be Part Of The Solution To The Nonperforming Loan Burden, Nov. 21, 2016
- A Look At Internal Controls In The Global Residential Mortgage Servicing Industry, July 14, 2014
- Criteria Regarding "Prudent Servicing Practices" In CMBS Outlined, June 8, 2004
Only a rating committee may determine a rating action and this report does not constitute a rating action.
| Servicer Analysts: | Chiara Sardelli, London (44) 20-7176-3878; chiara.sardelli@spglobal.com |
| Aleksandra Boseva, London +44 (0)207 176 6710; aleksandra.boseva@spglobal.com | |
| Kaiti Vartholomaios, London +44 (0) 207 176 8412; kaiti.vartholomaios@spglobal.com | |
| Servicer Evaluation Analytical Manager: | Robert J Radziul, New York (1) 212-438-1051; robert.radziul@spglobal.com |
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