When does a transaction that falls under the provisions on the minimum loss coverage of non-performing exposures under Article 469a, subparagraph 2 CRR become non-performing within the meaning of Articles 47a to 47c CRR? From the day on which the risk position increases due to a forbearance measure (e.g. 01.06.2019) or from the day on which the risk position actually became non-performing (e.g. 01.12.2018)?

• Article 469a, as entitled, refers to non-performing exposures

• Paragraph 1 of Article 469a states that for risk positions which became non-performing before 26 April 2019, any shortfall in minimum loss coverage need not be deducted from the CET1 capital.  

In other words, risk positions that became non-performing before 26 April 2019 do not fall under the provisions of EU Regulation 2019/630 (Article 47a to 47c CRR).

• Article 469a subparagraph 2 concerns risk positions which became non-performing before 26.04.2019 and were contractually modified by a so-called forbearance measure in such a way that the risk position vis-à-vis the debtor is increased through the disbursement of fresh money. As a result of the contractual adjustment, the claim is newly justified as a non-performing claim / risk position (see also recital 8 of EU Regulation 2019/630) and is therefore no longer covered by subparagraph 1.

In other words, the assessment of whether this non-performing risk position falls under the provisions of article 47a to 47c CRR is no longer based on when it became non-performing (e.g. 1 December 2018), but on the time at which the contract was amended (e.g. 1 June 2019).

Please note that as part of adjustments to the Single Rulebook Q&A process, agreed by the EBA and the European Commission, it has been decided to reject outstanding questions submitted before 1 January 2020, when the Q&A process was updated as part of the last ESAs Review. In particular, the question that you have submitted has now regrettably been rejected and will not be addressed.

If you believe your question would still benefit from clarification, you are invited to resubmit your question, adapting it to reflect any legislative, regulatory or other relevant developments that may have occurred since the initial date of submission. The EBA will aim to address resubmitted questions as a matter of priority. When considering to resubmit, you are kindly requested to observe the updated admissibility criteria agreed in the context of the adjustment of the Q&A process, available in the Additional background and guidance for asking questions. We hope for your understanding.

For further information please refer to the press release and the updated Q&A page.