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December 14, 2017

EBA published the data templates that will provide a common EU dataset for the screening, financial due diligence, and valuation during nonperforming loan (NPL) transactions. The templates will create the foundation for NPL transactions across the EU. The EBA NPL templates are not a supervisory reporting requirement. They are designed in a way that they can act as a market standard and form the foundation for NPL secondary markets initiatives. Banks can use these templates on a voluntary basis for NPL transactions.

The EBA NPL transaction templates provide data loan by loan (the most granular level), including information on counterparties related to the loan and the collateral provided. The templates are built on existing reporting, which should reduce implementation costs for banks. They provide a common EU data set but bespoke parts of the templates capture national specificities. For market screening, a separate stratified data subset provides a high level view of an NPL portfolio. During their development, the templates were discussed with market participants, competent authorities, and EU institutions. The feedback received was integrated into the templates, including on the ranking of the different data fields, according to their importance for valuation and financial due diligence purposes. EBA is providing these templates to allow banks to supply comparable and standardized data on NPLs to meet the need of investors and other stakeholders. 

These templates aim at enhancing standardization of NPL-related data and at reducing information asymmetries between potential buyers and sellers of NPLs portfolios. They also aim to enhance the granularity, quality, and comparability of NPL data and to increase transparency and market certainty. An extended use of the templates is expected to widen the investor base, lower entry barriers to potential investors, improve data quality and availability, support price discovery, and facilitate development of the NPL secondary market. 

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Keywords: Europe, EU, Banking, NPLs, Data Templates, Secondary Market for NPLs, Transaction Platforms, EBA

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