Response to discussion on the review of the NPL transaction data templates
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On the lease fields, we have no comments.
On the lease fields, we have no comments.)
On the lease fields, we have no comments.)
We have added all comments on the fields in the sections before.
1. Do you agree with the proposed data structure and the relationship between templates? If not, please provide explanation.
The structure of the data template is sensical and logical. The relationship between the different templates is clear and will make the data digestible.2. Do you agree with the deletion of data categories ‘NPL portfolio’ and ‘Swap’? If not, please provide explanation.
The removal of the Swap data category and the merging of several data categories simplifies the structure. Concerning the removal of the NPL portfolio ID which will relate to the sale perimeter but also to any sub-segments of the sale, in Intrum’s view, this can be managed in the relationship template as a data field mapping a loan to a portfolio or segment.3. Do you think the suggested list of data fields capture all the relevant information on the counterparty needed for NPL valuation and financial due diligence? If not, please indicate which other data fields should be included and provide explanation for this.
This template contains all relevant information on the counterparty; one piece of information which drives value was excluded which is if the counterparty is deceased. In line with the GDPR, a buyer will not be able to assess the collectability of a counterparty. If the counterparty is deceased, this is important information as this data point allows us to properly value the portfolio and it will not be put into the contract as a warranty from the seller.4. Do you think any specific data fields should be excluded from the template? If yes, please specify the data fields and give explanation to your answer.
As per Question 3 (This template contains all relevant information on the counterparty; one piece of information which drives value was excluded which is if the counterparty is deceased. In line with the GDPR, a buyer will not be able to assess the collectability of a counterparty. If the counterparty is deceased, this is important information as this data point allows us to properly value the portfolio and it will not be put into the contract as a warranty from the seller.)5. Do you agree that data fields on current external and internal credit scores and current external and internal credit scores at origination should be included in the template (for both private individual and corporate counterparties)?
While the credit scores are relevant as a data point for the valuation of a portfolio of loans, they might not fully relate to the current situation of the borrowers. This is also the case for the details of the financial statement or the company’s balance sheet as this might not be as relevant depending on the age of the information provided. For individual exposures this information if obtained recently is more valuable.6. Do you agree that data fields on corporate’s latest available financial statement amounts should be included in the template?
As per Question 5 (While the credit scores are relevant as a data point for the valuation of a portfolio of loans, they might not fully relate to the current situation of the borrowers. This is also the case for the details of the financial statement or the company’s balance sheet as this might not be as relevant depending on the age of the information provided. For individual exposures this information if obtained recently is more valuable).7. Do you agree that data fields related to corporate counterparties’ assets and liabilities, market capitalisation should be included in the template?
As per Question 5 and 6 (While the credit scores are relevant as a data point for the valuation of a portfolio of loans, they might not fully relate to the current situation of the borrowers. This is also the case for the details of the financial statement or the company’s balance sheet as this might not be as relevant depending on the age of the information provided. For individual exposures this information if obtained recently is more valuable).8. Do you agree with the proposed Template 2 of Annex I? If not, please provide explanation to your answer.
The relationship template is sufficient to link all templates together. No further comment on this aspect.9. Do you agree with the inclusion of the data fields related to interest rates and other information as per contractual agreement for the valuation and financial due diligence of NPLs, especially when they are not more than 90 days past due? Please provide data field-specific explanation to your answer.
For NPLs before charge-off, all information on the contractual rates is essential to assess the future balance. For NPLs after charge-off, the contractual interest rates in the data tape as Current Interest Base Rate, Current Interest Margin, Current Interest Rate Reference, Interest Cap Rate and Interest Floor Rate are important to assess the balance development of the financial instruments especially on collateralized assets.10. Do you agree with the inclusion of the data fields related to forbearance measures for the valuation and financial due diligence of NPLs?
In our view, the inclusion of the forbearance data is correct and will support a more accurate valuation.11. Do you think the suggested list of data fields capture all relevant information on financial instrument needed for NPL valuation and financial due diligence? If not, please indicate which other data fields should be included and provide explanation for this.
The template covers most of the required fields for the valuation of NPLs, of which some data points are only relevant for specific situations. In short we would not recommend removing any data point. After reviewing the list of fields, a data point which is not in the template is the balance at charge-off which is used in valuations to calculate the collection rates from charge-off to align this with our internal benchmarks. This is, in our view, crucial information.On the lease fields, we have no comments.
12. Do you think any specific data fields should be excluded from the template? If yes, please specify the data fields and give explanation to your answer.
As per Question 11 (The template covers most of the required fields for the valuation of NPLs, of which some data points are only relevant for specific situations. In short we would not recommend removing any data point. After reviewing the list of fields, a data point which is not in the template is the balance at charge-off which is used in valuations to calculate the collection rates from charge-off to align this with our internal benchmarks. This is, in our view, crucial information.On the lease fields, we have no comments.)
13. Do you agree with the data fields related to lease? Please provide data field-specific explanation to your answer.
As per Question 11 and 12 (The template covers most of the required fields for the valuation of NPLs, of which some data points are only relevant for specific situations. In short we would not recommend removing any data point. After reviewing the list of fields, a data point which is not in the template is the balance at charge-off which is used in valuations to calculate the collection rates from charge-off to align this with our internal benchmarks. This is, in our view, crucial information.On the lease fields, we have no comments.)
14. Do you think the suggested list of data fields capture all relevant information on collateral needed for NPL valuation and financial due diligence? If not, please indicate which other data fields should be included and provide explanation for this.
The fields and data points presented in the document are sufficient for all the needs on the property collaterals, non-property collaterals and enforcement.15. Do you think any specific data fields should be excluded from the template? If yes, please specify the data fields and give explanation to your answer.
As per Question 14 (The fields and data points presented in the document are sufficient for all the needs on the property collaterals, non-property collaterals and enforcement.)16. Do you agree with the data fields on the characteristics of non-property collateral? Please provide data field-specific explanation to your answer.
As per Question 14 and 15 (The fields and data points presented in the document are sufficient for all the needs on the property collaterals, non-property collaterals and enforcement.)17. Do you agree with the data fields related to the enforcement of collateral? Please provide data field-specific explanation to your answer.
As per Question 14, 15 and 16 (The fields and data points presented in the document are sufficient for all the needs on the property collaterals, non-property collaterals and enforcement.)18. Do you agree with the proposed Template 5 of Annex I for NPL valuation and financial due diligence? Please provide data field-specific explanation to your answer.
The fields in the collection and repayment template are clear and sufficient. The logic of presenting this in a 36 month backward and forward looking way can, in our view, be optimized by adding a date field which represents the date of payment or scheduled payment. The monthly aggregation can then be done by the paying to accommodate their method of valuation. This is also essential for the due diligence as we check the accuracy of the data provided - with the exact dates, this is easier to verify.19. Do you agree with description of data fields presented in data dictionary?
The field description in the data dictionary is suitable and coherent with our understanding of the fields.20. Do you agree with criticality (and non-criticality) of data fields presented in data dictionary? If not, please provide suggestions and explanations related to specific data fields.
In template 5 collection and repayment, to align the auto segment with the other segment in terms of critical information as the information in fields repayment plan and history of total repayments are equally important in auto cases.21. Do you agree with confidentiality aspects of data fields? If not, please provide explanation.
The fields classified as confidential are, in our view, correct and should not be extended.22. Do you agree with excluding no data options for data fields? If not, please provide suggestions and explanations related to specific data fields.
The exclusion of a no data option for data fields, is in our view, correct.23. Please provide your views on how proportionality considerations regarding the size of the exposures or portfolios being sold should be incorporated in the implementation of NPL data templates.
Assuming all data is available within the seller’s systems even on a smaller value proposition the full extent of the data is valuable and if this template is implemented into the seller’s systems extracting it, this data has no constraints in terms of size. In case a seller is unable to provide specific fields a waiver can be given on those fields.24. Should there be a threshold (e.g. in monetary terms) for the application of the proportionality principle? If yes, then how should this be defined?
An arbitrary threshold on the value of a portfolio can be different for different sellers, as for one seller a certain amount can be strategic while for the other seller it is “business as usual”. We recommend no thresholds, and that full data is always delivered. If a threshold needs to be set our suggestion is to make this in relation to the seller’s financial situation to ensure proportionality.25. Do you agree that the proposed approach takes into account, in an adequate way, the proportionality principle? If not, which additional elements should be considered?
A key point for buyers is that the information in the fields is correct and accurate and that the seller would warrant the populated fields.26. Please provide your views on the asset classes covered and whether any specific data fields, other than already foreseen, should be included in the templates for ensure full coverage of certain asset classes.
In our view these templates should be used for banking and non-banking asset classes to allow the non-banking industry to benefit from the work done on the banking segment. The template for the other asset classes can be a more condensed version on the unsecured retail template.We have added all comments on the fields in the sections before.