Featured Product

    ECB Revises Prudential Provisioning Expectations for New NPEs

    August 22, 2019

    ECB is revising its supervisory expectations for prudential provisioning of new non-performing exposures (NPEs) specified in the “Addendum to the ECB Guidance to banks on non-performing loans” (Addendum). The decision was made after taking into account the adoption of a new EU regulation that outlines the Pillar 1 treatment for NPEs. This new regulation, which entered into force on April 26, 2019 and amends the Capital Requirements Regulation regarding minimum loss coverage for NPEs, requires a deduction from own funds when NPEs are not sufficiently covered by provisions or other adjustments.

    The revision of supervisory expectations follows the ECB commitment to reconsider supervisory expectations for new NPEs once the new legislation on Pillar 1 treatment of NPEs had been finalized. To make the treatment of NPEs more consistent, the following changes have been made to the supervisory expectations communicated in the Addendum:

    • The scope of the supervisory expectations for new NPEs will be limited to NPEs arising from loans originated before April 26, 2019, which are not subject to Pillar 1 NPE treatment. NPEs arising from loans originated from April 26, 2019 onward will be subject to Pillar 1 treatment, with the ECB paying close attention to the risks arising from them.
    • The relevant prudential provisioning time frames, the progressive path to full implementation, the split of secured exposures, and the treatment of NPEs guaranteed or insured by an official export credit agency have been aligned with the Pillar 1 treatment of NPEs set out in the new EU regulation.

    All other aspects, including specific circumstances, which may make prudential provisioning expectations inappropriate for a specific portfolio/exposure, remain as described in the Addendum. Supervisory expectations for the stock of NPEs (that is, loans classified as NPEs on March 31, 2018) remain unchanged.

     

    Related Links

    Keywords: Europe, EU, Banking, NPLs, NPE, Credit Risk, CRR, Pillar 1, ECB

    Featured Experts
    Related Articles
    News

    EU Amends IFRS 9 Rule, Changes Concern Interest Rate Benchmark Reforms

    EU published Regulation 2020/34 regarding the International Accounting Standard (IAS) 39 and International Financial Reporting Standards (IFRS) 7 and 9.

    January 16, 2020 WebPage Regulatory News
    News

    FDIC and OCC Issue Statement on Heightened Cyber Security Risk

    In response to the heightened cyber-security risk facing the financial services industry and other critical business sectors, FDIC and OCC issued an interagency statement on heightened cyber-security risk.

    January 16, 2020 WebPage Regulatory News
    News

    BoE and FCA Outline Next Steps for LIBOR Transition in 2020

    BoE, FCA, and the Working Group on Sterling Risk-Free Reference Rates (RFRWG) have published a set of documents that outline the LIBOR transition priorities and milestones for 2020.

    January 16, 2020 WebPage Regulatory News
    News

    BCRA Updates Regulation on Capital Requirements and Information Regime

    BCRA updated the rules on minimum capital requirements for financial entities and on certain aspects of the information transparency regime for quarterly and annual supervision.

    January 16, 2020 WebPage Regulatory News
    News

    BIS to Expand Central Bank Membership

    BIS is to expand its central bank membership base and to increase collaboration in its work as a forum for international cooperation and as a hub for central banks and other financial authorities.

    January 14, 2020 WebPage Regulatory News
    News

    EIOPA Issues Technical Specifications for Market and Credit Risk Study

    EIOPA published the technical specifications, including instructions, for the market and credit risk modeling comparative study for year-end 2019.

    January 13, 2020 WebPage Regulatory News
    News

    FED Publishes FAQs on Tailoring Rules for Banks

    FED released a letter announcing the publication of an initial set of frequently asked questions (FAQs) in response to questions from institutions.

    January 13, 2020 WebPage Regulatory News
    News

    IA of Hong Kong Publishes Stress Testing Scenarios in Relation to ORSA

    IA of Hong Kong published the prescribed scenarios for stress and scenario testing to be used by the authorized insurers conducting general insurance business.

    January 13, 2020 WebPage Regulatory News
    News

    FDIC Letter on Submission of Call Reports by End of January 2020

    FDIC, in a letter to financial institutions, announced that the Consolidated Reports of Condition and Income (Call Reports) for the December 31, 2019 report date must be submitted to the Central Data Repository of the relevant US agencies by January 30, 2020.

    January 13, 2020 WebPage Regulatory News
    News

    EBA Consults on Calculation of Own Funds Requirements for Market Risk

    EBA is consulting on the draft regulatory technical standards for calculation of the own funds requirements for market risk, under the standardized and internal model approaches of the Fundamental Review of the Trading Book (FRTB) framework.

    January 13, 2020 WebPage Regulatory News
    RESULTS 1 - 10 OF 4489