Contrarian opinion, but most elite Special Assets Group (“SAG”) officers are some of the most kind, intelligent and optimistic people you will ever meet. The elite officers are problem-solvers at heart and are driven by the complexity, fluidity and challenge of each unique situation. Special assets as a discipline is actually quite hard. The elite operators are experts in business, law and psychology in addition to core banking skills. These skills are needed in real-time, high stakes negotiations based on many variables with highly uncertain outcomes. To do this at a high level requires skill, temperament and strong lending background. There is a reason the best who handle the biggest cases are drawn to the challenges of problem solving. On the flip side, it’s also easy to understand why less skilled work-out professionals create a different view of the job.
Too often, the perception of a work-out officer is unfounded and rooted in the concept that people who could not cut it on the line are sent to work-out to sit in the basement a la the movie office space. While it makes for a great image more often than not it’s not quite an accurate assessment for most. Try being responsible for several billion in criticized assets that could change risk-ratings on a moments notice or improve and go back to the line. This goes back to the theme of a steady temperament pared with the triumvirate skillset of business, law and psychology. Not having one of the many traits necessary to be elite can cause a loss to the bank or just as equally create the perception that the work-out officer is less skilled.
To be strong in the business of banking you need to have a strong mind that can quickly understand business models, industries and trade, among other things. To really know work-out, you need to know bankruptcy law as well as your legal counsel. Now add to that your counter-party is typically going to be a closely family owned business that will do anything to fight foreclosure or a super-sophisticated sponsor that feels no loyalty to one of it’s many banks. These are just some of the reasons that the seasoned work-out officers are worried about the next generation and state of special assets groups. To master the tenets of many disciplines takes many years, many cases and the necessity of having gone through a downturn.
Ironically, what makes most of these folks great is temperament and positivity rather than a negative disposition. Delivering bad or tough news can be done if done in a dispositive way that clearly makes the debtor understand that the bank is not their partner. It’s how the message is crafted and put that shows the trade craft. This is where the psychology comes in. Yelling or taking a harsh tone is not only often unnecessary, but a sign of lack of control vs. stating the facts and focusing on the right demeanor however uncomfortable it might be for the debtor. Not every problem has a clear solution, but the tone and temperament help provide fixed variables. When psychology does not work then it’s time for law.
The gamesmanship that can take place is bankruptcy court is commonplace and debtors counsel along with myriad advisors are looking for ways to extract dollars and concessions from the bank. This is the last bastion where the SAG operator has to strongly understand bankruptcy code.
We are arguably basking in the last generation of old-school, SAG officers who were at their primes in 2008 and may or may not be around for the next downturn. Given the shrunken state of SAG departments it’s unclear how the next group of elite operators are going to developed or even how. To coincide with this trend, the best of the best typically take their skills to more lucrative pastures, but many find a long-term home within the banking industry. We should relish watching these folks in action while we can. Next time you see your SAG officer see whether they are in a good mood!
This article was first published by TMA.
Comments