Talking Finance: It pays to know if your write-down is worth it
Free money is always worth looking into, but the ‘time value of money’ must be taken into consideration first
One of the most frustrating things I come across as a financial adviser is watching a bank refuse to write down a loan and then selling that same loan, usually making a loss. The frustrating bit is what comes next.
The bank absorbs the loss. Then a distressed debt buyer (sometimes referred to as ‘vulture’) comes along, buys the loan and offers the borrower a write-down.
Most of the banks realising these losses exist purely...
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