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TEXT-S&P afrms/assigns Archon group Italian entities strong ranking
September 6, 2012 / 11:36 AM / 5 years ago

TEXT-S&P afrms/assigns Archon group Italian entities strong ranking

Sept 06 -

OVERVIEW

-- We have affirmed our STRONG rankings on Archon Group Italia/Societa Gestione Crediti as a special servicer of residential and commercial mortgages in Italy.

-- We have also assigned a STRONG ranking to Archon Group Italia/Societa Gestione Crediti as a special servicer of unsecured loans in Italy.

-- The outlook is stable.

-- Archon Group Italia/Societa Gestione Crediti--two separate legal entities that we rank as one--forms part of the Archon group, which in turn is a wholly owned subsidiary of the Goldman Sachs Group.

Standard & Poor’s Ratings Services’ has affirmed its STRONG rankings on Archon Group Italia S.r.l./Societa Gestione Crediti (AGI/SGC) as a special servicer of residential and commercial mortgages in Italy. We have also assigned a STRONG ranking to AGI/SGC as a special servicer of unsecured loans in Italy.

AGI and SGC remain separate legal entities, but their day-to-day operations are fully integrated, and we rank them as one entity. AGI/SGC is part of the Archon group of entities, which in turn is a wholly owned subsidiary of the Goldman Sachs Group Inc. (GS), the parent holding company of Goldman, Sachs & Co. In mid-2011, GS made a strategic decision to fully integrate the Archon group’s global operations into the GS group--aiming to create operational consistencies and efficiencies, and to standardize the businesses to maintain regulatory compliance.

OUTLOOK

The outlook is stable on AGI/SGC as a special servicer of residential and commercial mortgages and unsecured loans in Italy.

MANAGEMENT AND ORGANIZATION

We have affirmed our STRONG management and organization subranking on AGI/SGC as a special servicer of residential and commercial mortgages, and assigned a STRONG management and organization subranking on AGI/SGC as a special servicer of unsecured loans in Italy. The subranking on AGI/SGC reflects the following, in our view:

-- It boarded no new portfolios since our most recent review and has concentrated on existing portfolios, which have reduced by number and balance. We may review our current rankings if there has been no growth in loan portfolios by our next review, in 2013.

-- The planned integration into Goldman Sachs should, in our opinion, enhance operations and bring greater cross-group consistency and efficiency.

-- We consider the staffing structure to be appropriate to operations; employee headcount has been reducing in line with loan numbers, but experience and tenure remain commensurate with the rankings we have assigned.

-- Training and development of employees has continued at a level that is commensurate with business requirements, especially when considering staff experience levels.

-- We consider that the internal audit and risk management controls provide independent oversight for operations.

-- The IT platform, which has been developed over a number of years, provides highly automated servicing systems and management information.

-- The business continuity plan is less structured than we tend to see for other servicing operations, although staff have the capability to work from home.

LOAN ADMINSTRATION

We have affirmed our STRONG loan administration subranking on AGI/SGC as a special servicer of residential and commercial mortgages, and assigned a STRONG management and organization subranking on AGI/SGC as a special servicer of unsecured loans in Italy. The subranking on AGI/SGC reflects our view that collections performance has been maintained in line with business plans across the various portfolios, despite challenging market conditions.

FINANCIAL POSITION

We consider AGI/SGC’s financial position to be Sufficient. We consider that there is sufficient financial strength from GS (A/Negative/A-2) as parent company to sustain AGI/SGC’s special servicing operation for at least the next 12-to-18 months.

RELATED CRITERIA AND RESEARCH

-- Servicer Evaluation: Archon Group Italia S.r.l. /Societa Gestione Crediti, Sept. 6, 2012

-- Servicer Evaluation: Archon Group Italia S.r.l./Societa Gestione Crediti, Sept. 3, 2010

-- Structured Finance Sector Report Card: Low Lending Levels Continue To Constrain European Servicers’ Portfolio Growth, Nov. 23, 2009

-- Standard & Poor’s Revises Criteria Methodology For Servicer Risk Assessment, May 28, 2009

-- Servicer Evaluation Ranking Criteria: U.S., Sept. 21, 2004

-- Select Servicer List, published monthly

-- Structured Finance Sector Report Card: European Loan Servicers, published half-yearly

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