Response to consultation on Implementing Technical Standards on NPL transaction data templates
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Regarding template 3 itself, the key information missing, in our view, relates to the split between the principal amount outstanding and the unpaid interest. In this template, we have a combined “Outstanding nominal amount” (field 3.12), but we should ideally have separate fields for principal and interest, instead of a combined one, especially considering that in some jurisdictions this is a requirement for sending the cases to legal.
It would also be important to clarify if this outstanding nominal amount reported in the data tape includes or excludes potential “Debt forgiveness amounts” (field 3.45).
Additionally, in terms of a “Forbearance measure”, for example, the Overindebtness procedure (BDF) in France or the Cambialis in Italy, it would be important to include additional fields that describe properly the terms of the payment plans agreed upon with the debtors, such as instalment amounts, payment frequency, balloon payments, the start date of the plan, the end date of the plan, etc. So, we recommend extending this information by separate fields.
Also, we noticed that most of the legal information is at the counterparty or collateral level and not at the level of the loan itself and we believe that this loan information is crucial for pricing.
Below is a suggestion for additional fields that we believe would be important to add for the sake of completeness:
• Termination date (Mandatory)
• Current Principal amount (Mandatory)
• Current Interest amount (Mandatory)
• Number of external agencies that have worked the loan (Non-mandatory)
• The legal status of the loan (Mandatory)
• Date of legal actions (Mandatory)
• All information described in the paragraph above related to the Forbearance measures (the start date of the plan, end date of the plan, payment frequency, instalments amounts, etc.) where applicable.
Apart from the highest lien rank in favour of the seller, it would be important to know if there are other lien ranks that are in its favour. Likewise, it would be important to have information about which loan belongs to each lien to be able to calculate properly the waterfall.
Therefore, our suggestion would be to add to this template the relation between Loan, Collateral and Lien (1:1:1 relation).
In the event that the collateral has already been sold/executed through a court proceeding, fields are lacking about the “Cash in court amount” pending to be distributed. This is crucial information.
Also, we noticed that some fields that are flagged as “Not Mandatory” should, in our view, be mandatory where necessary. For example: “Collateral Repossessed Date” and “Next Auction Date”.
This list of fields would be important to include:
• For REOs Land registry identification number (mandatory)
• Cash in court (mandatory).
In our view, buyers should have full access to this historical collection at best from the default date and at least from the last 12 months prior to the cut-off date. The data should be provided in as granular a way as possible, on loan level and in monthly payments.
Consequently, our suggestion on the best way of populating this information would be in a few columns containing the following information:
• Loans ID (mandatory)
• Payment date (mandatory)
• Payment amount (mandatory)
• Payment type (liquidation, direct debit, salary seizure, etc.) (mandatory)
1. Do the respondents agree that these draft ITS fits for the purpose of the underlying directive?
Overall, the template covers the most basic variables needed for running an NPL valuation. That said, some additional variables would be good to add to complement these basic variables. In addition, further clarification on some of the items would be required so as to have a more precise understanding of the data. This would lead to more accurate pricing of NPL portfolios.2. What are the respondents’ views on the content of Template 1? Please provide any specific comment you may have on the data fields in the dedicated columns of the data glossary (Annex II to the draft ITS) added for your feedback.
Template 1 provides enough data related to the counterparties involved; the data provided is more extensive than usual. However, we do disagree with the usage of the proportional threshold of 25k EUR (please see further details under question 11).3. What are the respondents’ views on the content of Template 3? Please provide any specific comment you may have on the data fields in the dedicated columns of the data glossary (Annex II to the draft ITS) added for your feedback.
Our first comment refers, as in the previous point, to the use of the proportional threshold of 25K EUR. Any information in this template flagged as “Mandatory” should be provided regardless of the loan size.Regarding template 3 itself, the key information missing, in our view, relates to the split between the principal amount outstanding and the unpaid interest. In this template, we have a combined “Outstanding nominal amount” (field 3.12), but we should ideally have separate fields for principal and interest, instead of a combined one, especially considering that in some jurisdictions this is a requirement for sending the cases to legal.
It would also be important to clarify if this outstanding nominal amount reported in the data tape includes or excludes potential “Debt forgiveness amounts” (field 3.45).
Additionally, in terms of a “Forbearance measure”, for example, the Overindebtness procedure (BDF) in France or the Cambialis in Italy, it would be important to include additional fields that describe properly the terms of the payment plans agreed upon with the debtors, such as instalment amounts, payment frequency, balloon payments, the start date of the plan, the end date of the plan, etc. So, we recommend extending this information by separate fields.
Also, we noticed that most of the legal information is at the counterparty or collateral level and not at the level of the loan itself and we believe that this loan information is crucial for pricing.
Below is a suggestion for additional fields that we believe would be important to add for the sake of completeness:
• Termination date (Mandatory)
• Current Principal amount (Mandatory)
• Current Interest amount (Mandatory)
• Number of external agencies that have worked the loan (Non-mandatory)
• The legal status of the loan (Mandatory)
• Date of legal actions (Mandatory)
• All information described in the paragraph above related to the Forbearance measures (the start date of the plan, end date of the plan, payment frequency, instalments amounts, etc.) where applicable.
4. What are the respondents’ views on the content of Template 4? Please provide any specific comment you may have on the data fields in the dedicated columns of the data glossary (Annex II to the draft ITS) added for your feedback.
We believe that most of the relevant information is well covered, however, we found that some additional information should be added in order to run a proper valuation.Apart from the highest lien rank in favour of the seller, it would be important to know if there are other lien ranks that are in its favour. Likewise, it would be important to have information about which loan belongs to each lien to be able to calculate properly the waterfall.
Therefore, our suggestion would be to add to this template the relation between Loan, Collateral and Lien (1:1:1 relation).
In the event that the collateral has already been sold/executed through a court proceeding, fields are lacking about the “Cash in court amount” pending to be distributed. This is crucial information.
Also, we noticed that some fields that are flagged as “Not Mandatory” should, in our view, be mandatory where necessary. For example: “Collateral Repossessed Date” and “Next Auction Date”.
This list of fields would be important to include:
• For REOs Land registry identification number (mandatory)
• Cash in court (mandatory).
5. What are the respondents’ views on the content of Template 5? Please provide any specific comment you may have on the data fields in the dedicated columns of the data glossary (Annex II to the draft ITS) added for your feedback?
Historical payment information is by far the most relevant information for NPLs valuation. We believe that the current format suggested in Template 5 is not the best way of providing this data.In our view, buyers should have full access to this historical collection at best from the default date and at least from the last 12 months prior to the cut-off date. The data should be provided in as granular a way as possible, on loan level and in monthly payments.
Consequently, our suggestion on the best way of populating this information would be in a few columns containing the following information:
• Loans ID (mandatory)
• Payment date (mandatory)
• Payment amount (mandatory)
• Payment type (liquidation, direct debit, salary seizure, etc.) (mandatory)