Ann: Pioneer and Senior Financiers to extend Standstill Agreement, page-18

Spider5

On numerous occasions you write to the effect that PNC has a unique “business model and philosophy”. This could cover PNC's entire model that would include funding, staffing, revenue and profit recognition, short-term versus long-term thinking, image projection, et cetera. Recent history suggests that the totality of PNC's business model and philosophy has not stood the test of time, which suggests it is a flawed approach.

If you meant a narrower range of things, like choice of the debtors portfolios it buys, and how it liquidates them, then could you tell us how this differs from CCP. The litigious approach that some debt collectors use should be excluded from comment, because that is not CCP's style, and I am specifically interested in a PNC–CCP comparison. I do not know if the choice of terminology (PNC's "liquidations" and CCP's "collections") is meaningful or not – CCP does not sell future cash flows, it takes in the money via actual collections.

I still think that a deal between PNC and CCP is likely to produce an optimal outcome. The pair probably share views on what debtors portfolios should be bought, and the collections approach that should be used. They would differ on their respective views on funding, and perhaps on their focus on consistently buying fresh debt (CCP will at times hang back on acquiring fresh debtors portfolios, and focus on collecting on older debt. They would also differ on profit recognition – I get the feeling that CCP hides profits at times, and uses the buffer to take the blips out of its reported results, whereas PNC has focused on showing good performance early.