Special operations

FMO aspires to be a responsible financier and to prevent financial distress among its clients. If companies run into trouble, and are transferred to our Special Operations department, we provide support through tailor-made debt restructuring and intense monitoring, helping clients get back on track where possible. In 2011, we enhanced our investigations into the reasons why Special Operations projects became distressed. By focusing on improving understanding and education within FMO on the root of these problems, we aim to prevent their recurrence.

The number of new projects transferred to our Special Operations department in 2011 remained on a par with 2010. Inflow and outflow stabilized, with 12 new cases entering and exiting the department. Due to varied sector and country circumstances, it is difficult to pinpoint one overriding factor that triggered the companies to become distressed.

Education around Special Operations cases was prioritized in 2011. We intensified our efforts to feed lessons learned back to the front office.

In working towards this aim, the Special Operations department became more active in organizing presentations and participating in FMO training courses on this subject in 2011. Analyzing our distressed portfolio and whether problems could have been detected at an earlier stage is key to ensuring FMO has done everything in its power to support its current and future clients.

Since 2010, Special Operations' environmental & social expert has been helping distressed companies improve their ESG performance and detect problems at an early stage. This proactive approach proved valuable in 2011, particularly in regards to two waste processing projects in Bangladesh and Vietnam. When projects of this scope encounter financial difficulties, environmental pollution becomes a severe threat. The environmental & social expert provided a key support role in these cases, for example by helping our Bangladesh client draft a water sanitation system plan, crucial to ensuring the responsible disposal of waste water.

Since we operate at the local level, the employees of distressed companies in our portfolio are among our main stakeholders. We actively advocate the fair treatment of these employees, who are placed in an unfavorable position due to their employer defaulting. Company shareholders are another FMO stakeholder and we engage in dialogue and negotiations with them when relevant.

The Special Operations portfolio did not gradually decrease in 2011 as expected. While circumstances remain quite favorable in our target emerging markets, they are not immune to the overall deteriorating global economic environment. As such, we no longer expect the Special Operations portfolio to decrease in the forth coming period.