Austrian Economic Chamber, Division Bank and Insurance
From a business perspective both splits do not provide any more insight into the underlying credit quality of the forborne/NPE portfolio as (statutory) coverage ratios should not be the main credit quality indicator.
In case the column will be added, the same breakdown should be considered for the collateral columns as well.
From a business perspective those splits do not provide any more insight into the underlying credit quality of the NPE portfolio as (statutory) coverage ratios should not be the main credit quality indicator.
In case the columns will be added, then the breakdown of ageing buckets should be harmonized between EBA, the EU Commission and ECB to ensure comparability of the numbers, get a full picture and to avoid additional costs for implementation and reconciliation.
Only those loans and advances secured with immovable property with LTV higher than 80% are relevant to the public. The 60-80% LTV bucket should therefore be removed.
While we understand the general purpose of a more granular view on NPE/forborne portfolios, the main parameters for such views should be harmonized to ensure comparability of the numbers, get a full picture and to avoid additional costs for implementation and reconciliation. We hope that EBA will focus on harmonization when amending the reporting of NPEs and FBEs (FINREP), which is planned to be consolidated still in 2nd half of 2018.
Additionally, we would like to ask for confirmation of our understanding respectively providing more details:
1. In our understanding Template 7 contains only loans to customers at cost or at amortized costs as given in the definition but no loans which are measure fair value through P&L.
2. In Template 7 the amount in row 2 “of which: secured” is the capped amount of collateral as defined in Annex V of the Commission Implementing Regulation (EU) No 680/2014 as modified by Commission Implementing Regulation (EU) n°2017/1443 whereas the amount in row 8 “Collateral” is the uncapped amount of collateral.
3. In template 8, row 12 “Outflow due to risk transfers” is defined as gross reduction of non-performing loans and advances due to the securitization or other risk transfers qualifying for de-recognition from the balance sheet. Can you please provide references to CRR or examples for defining “other risk transfers qualifying for the de-recognition from the balance sheet”?
4. In Template 2 row 3 Non-performing forborne loans and advances that failed to meet the non-performing exit criteria is definite as gross carrying amount of non-performing forborne loans and advances that are in the perimeter of non-performing forborne loans and advances under probation of 1 year and failed to comply with the forbearance measures after the twelve months period of probation. Having in mind that the standard business practice (where exposures are treated as non-performing longer than 1 year to avoid re-defaults) as well as the Austrian law (which sets up minimum of 3 years for private insolvencies), our understanding is that average period in default for the respective Institution should be considered.