Since the concession of more favourable conditions as part of commercial practice is not comparable to a forbearance measure, if, during the probation period, the client (forborne performing), once their situation has returned to normality after largely overcoming potential ‘difficulties’, were to request an adjustment of the conditions in line with other competing banks, if the bank met the request for obvious reasons of expediency, would it then be forced to reclassify the client?
Posto che la concessione di condizioni più favorevoli, rientranti nella prassi commerciale, non è equiparabile ad una misura di forberance, se nel periodo probatorio il cliente (forborne performing), tornato in condizioni di piena regolarità avendo ampiamente superato potenziali “difficoltà”, richiedesse un adeguamento delle condizioni rispetto ad altre banche concorrenti, a fronte della adesione della banca alla richiesta per evidenti ragioni di opportunità, la stessa si vedrebbe quindi costretta a ri-classificare il cliente?
It is important that the concession of more favourable conditions, as part of commercial practice, is not equated to a forbearance measure even during the probation period, whether because of the intrinsic difference between the two situations or due to the operational complexity resulting from the subsequent need to reclassify the client.
E’ importante che la concessione di condizioni più favorevoli, rientranti nelle prassi commerciali, non sia equiparata ad una misura di forberance neanche nel periodo probatorio sia per la differenza intrinseca delle due fattispecie, sia per la complessità operativa derivante da una conseguente necessità di riclassificazione del cliente.
Paragraph 256 of Part 2 of Annex V of the Regulation (EU) No 680/2014 – ITS on Supervisory Reporting of institutions (ITS) sets out the conditions that an exposure with forbearance measures must meet to see its classification as forborne discontinued.
Until all these conditions are met at the end of the probation period, the exposure shall continue to be identified as performing forborne under probation (par. 257).
Furthermore, par. 242 provides non- exhaustive examples of concession that can be considered as forbearance, provided that the debtor is in financial difficulties. In general, the classification as forborne shall consider the substance of the agreement rather than the "formal" modification of the terms and conditions.
When a performing forborne exposure is under probation period, concessions of more favorable conditions, as part of commercial practice, shall be evaluated if they meet the classification as forborne measure.
It is worth pointing out that, under par. 260 “where additional forbearance measures are applied to a performing forborne exposure under probation that has been reclassified out of non-performing category or the exposure becomes more than 30 days past due, it shall be classified as non-performing”.
Concessions qualifying as forbearance are directly linked to the capacity of the debtor to meet its payment obligations. Indeed, paragraph 241 point a) implies that concessions specifically address the situation of a given troubled debtor by granting tailored terms and conditions and consequently refers in particular to the core terms of the contract related to financial arrangements.
If the commercial practices imply concessions granted for reasons other than financial difficulties of the debtor, then they shall not be considered as forbearance measures, even though they are granted during the probation period. However, in these cases, the assumption that the more favorable conditions granted are applied to enhance the debtor capacity to meet its financial obligation is difficult to be rebuttable anyway.