2015_1839 Treatment of ‘short-term’ exposures - Trattamento delle esposizioni a “breve termine"

Question ID:

2015_1839

Legal Act:

Regulation (EU) No 575/2013 (CRR)

Topic:

Supervisory reporting - FINREP (incl. FB&NPE)

Article:

Subparagraph:

COM Delegated or Implementing Acts/RTS/ITS/GLs/Recommendations:

Draft ITS on Supervisory Reporting of Institutions

Article/Paragraph:

172 163

Disclose name of institution / entity:

Yes

Name of institution / submitter:

ITALIAN BANKING ASSOCIATION - ABI

Country of incorporation / residence:

ITALY

Type of submitter:

Industry association

Subject Matter:

Treatment of ‘short-term’ exposures - Trattamento delle esposizioni a “breve termine"

Question:

With regard to short-term exposures involving renegotiations triggered by financial difficulties of the debtor – hence forborne – we ask that the deadline after which the anomalies and subsequent modifications in use must be considered for forborne purposes (past due invoices not paid by a certain date, tied-up amounts, time given for covering outstanding claims, etc.) be established objectively beforehand.

Con riferimento alle esposizioni a breve termine in presenza di rinegoziazioni dovute a difficoltà finanziarie del debitore e dunque forborne si chiede di stabilire in modo oggettivo e predeterminato la tempistica oltre la quale le anomalie e le successive modifiche di utilizzo devono essere considerate ai fini forborne (fatture scadute e non rimborsate oltre una certa data, importi immobilizzati, tempi per la copertura degli insoluti ecc.).

Background on the question:

So that operations have clear and agreed conditions, it is important to have a clear definition of the time period beyond which the anomalies and subsequent modifications in use must be considered for forborne purposes

Al fine di consentire una operatività con condizioni certe e predeterminate è importante disporre di una chiara definizione della tempistica oltre le la quale le anomalie e le successive modifiche di utilizzo devono essere considerate ai fini forborne.

Date of submission:

19/02/2015

Published as Final Q&A:

13/12/2019

Final Answer:

According to paragraphs 240, 241, 242, 244 of Annex V of the Regulation (EU) No 680/2014 – ITS on Supervisory Reporting of institutions (ITS) , forbearance measures are concessions towards a debtor that is experiencing difficulties to meet its financial conditions either in case of (i) modification of the previous terms and conditions of a contract or (ii) refinancing of a troubled debt contract by mean of another debt contract under more favorable terms.
Therefore, the ITS does not provide differentiation based on expired time for classification in the category in the forborne exposure. As such, the valuation shall be based exclusively on the financial difficulties of the debtor that resulted in the granting of the concession.

Status:

Final Q&A

Answer prepared by:

Answer prepared by the EBA.