Kruk S.A.

It has been a record year for Poland's largest group of companies dealing in receivables management. In 2010, in Poland and Romania, KRUK Group companies accepted for collection or purchased close to PLN 6bn worth of debt, up by one fourth on the previous year. The past year was especially busy on the Romanian market as the value of receivables purchased nearly tripled in comparison with 2009.

”When analysing the results of individual quarters of the year we were expecting a record but its size exceeded our expectations,” said Piotr Krupa, KRUK SA CEO. ”A 26% increase in account value means that KRUK Group companies had to handle PLN 1.2bn worth of debt more than in the previous year. It is a value that still a few years ago was assigned to us for collection over the entire year. The past 12 months were an exceptional period for us on the Romanian market. KRUK International made its debut there only three and a half years ago and has already become one of the leading players and, there is no need to hide it, is starting to achieve results similar to the results of its parent company."

In both countries, the KRUK Group purchased and accepted for collection receivables portfolios worth PLN 5.9bn (PLN 4.7bn in the previous year). Last year the value of accounts assigned for collection and purchased by KRUK Group companies in Poland practically remained unchanged. Both in 2010 and in 2009 it was around PLN 3.8bn. However, the Group recorded a significant growth in Romania where the value of accounts handled went up from PLN 850m in 2009 to nearly PLN 2.1bn last year. KRUK International (KRUK SA’s Romanian subsidiary) has been particularly active in debt purchases. Over the past twelve months is purchased debts worth PLN 1.3bn, up by more than PLN 1bn on the previous year.

At the same time,  in both countries, a clear upward trend can be observed in respect of the value of accounts assigned for collection by creditors (mainly from the banking sector). In Poland, the figure went up by 15% from PLN 2.6bn to PLN 3bn, while in Romania by as much as 45% from close to PLN 0.5bn to more than PLN 0.7bn.

What is interesting, significant differences can be observed in the number of accounts purchased or assigned for collection last year in both countries. While in Poland the number of new accounts went up by one-fifth, in Romania it went slightly down (by 2%). The above is a result of differences between both markets, the stage the respective economies are at, as well as of the general level of development of the financial sector in both countries. In Poland, creditors tend to assign for collection (as well as sell) considerable receivables packages with lower individual balances (average debt value is PLN 2,700). They are relatively fresh delinquencies which have not yet grown to include consecutive unpaid installments, penalties or interest. Banks react quickly and, as soon as they see the first signs of irregularity, they immediately assign the account for collection or set up a tendering process to sell the debts. In Romania on the other hand, KRUK International handles portfolios of relatively smaller number of accounts but whose individual values are higher (here the average debt balance is PLN 3,700). The above means that Romanian banks are still getting rid of olders debts.

The above dynamic increase in the volume/value of accounts handled requires increased resources. Over the past year the number of people working for the KRUK Group went up by one fifth with current employment at Group companies reaching nearly 1300. Headcount was growing the fastest in Romania (by more than 30% over the year) and currently the Romanian team exceeds 200 people. For the first time in history, employment at Polish KRUK Group companies has exceeded 1,000 people working across the country.

”The outlook for the industry is very promising,” said KRUK SA CEO. ”In accordance with a report prepared by the Gdańsk Institute for Market Economics, in 2014 the value of the receivables management market will reach PLN 22.2bn. The receivables management market has been developing also thanks to the tendency, growing year after year, to outsource collection services and to sell non-performing portfolios. For the past couple of years we have been witnessing an increasing propensity of businesses to outsource the debt collection function. In the context of continuous growth of the value of bad debts, companies that do not have strong collection departments will be unable to recover their receivables,” added Piotr Krupa.