EBA Consults on Guidelines for Managing Non-Performing Exposures
EBA launched a consultation on the guidelines for credit institutions on effectively managing non-performing exposures (NPEs) and forborne exposures (FBEs). The consultation on the guidelines runs until June 08, 2018 and the guidelines are to be implemented by January 01, 2019. EBA also released a video to help the interested stakeholders get familiar with the key features of the two sets of EBA templates on non-performing loans (NPLs) published on December 14, 2017. EBA designed the templates to help restart the secondary markets for NPLs in Europe, thus contributing to the EC action plan (released in July 2017) to tackle NPLs in Europe.
The guidelines are designed to ensure that consumers, who have taken out loans, are treated fairly at every stage of the loan life cycle. The guidelines specify sound risk management practices for credit institutions for managing NPEs and FBEs, looking at the governance and operations of the NPE workout framework, the internal control framework, and the NPE monitoring and early warning processes. The consultation paper seeks views on the threshold for assessing high NPE banks. The consultation paper notes that credit institutions with elevated levels of NPEs, measured as an NPL ratio of 5% or above, should establish the NPE strategy and related governance and operational arrangements.
The consultation paper also sets out requirements on processes to recognize NPEs and FBEs, along with a forbearance granting process, with a focus on the viability of forbearance measures. The paper suggests that forbearance measures should be granted only when they aim to restore sustainable repayment by the borrower and are thus in the interest of the borrower. Credit institutions are expected to monitor efficiency and effectiveness of forbearance measures and have in place policies and processes to assess borrowers' financial difficulties and identification of NPEs. The paper sets out requirements for competent authorities' assessment of credit institutions' NPE management activity as part of the Supervisory Review and Evaluation Process or SREP.
Related Links
Comment Due Date: June 08, 2018
Effective Date: January 01, 2019
Keywords: Europe, EU, Banking, Guidelines, SREP, Non-Performing Exposures, NPLs, EBA
Related Articles
BIS Examines Use of Big Data and Machine Learning at Central Banks
BIS published a paper that provides an overview on the use of big data and machine learning in the central bank community.
APRA Finalizes Reporting Standard for Operational Risk Requirements
APRA finalized the reporting standard ARS 115.0 on capital adequacy with respect to the standardized measurement approach to operational risk for authorized deposit-taking institutions in Australia.
ECB Publishes Guide for Determining Penalties for Regulatory Breaches
ECB published a guide that outlines the principles and methods for calculating the penalties for regulatory breaches of prudential requirements by banks.
MAS Sets Out Good Practices to Manage Operational Risks Amid COVID
MAS and The Association of Banks in Singapore (ABS) jointly issued a paper that sets out good practices for the management of operational and other risks stemming from new work arrangements adopted by financial institutions amid the COVID-19 pandemic.
ACPR Announces New Data Collection Application for Banks and Insurers
ACPR announced that a new data collection application, called DLPP (Datalake for Prudential), for collecting banking and insurance prudential data will go into production on April 12, 2021.
BCB Maintains CCyB at 0%, Initiates First Cycle of Regulatory Sandbox
BCB announced that the Financial Stability Committee decided to maintain the countercyclical capital buffer (CCyB) for Brazil at 0%, at least until the end of 2021.
EIOPA Launches Study on Non-Life Underwriting Risk in Internal Models
EIOPA has launched a European-wide comparative study on non-life underwriting risk in internal models, also kicking-off of the data collection phase.
SRB Publishes Overview of Resolution Tools Available in Banking Union
SRB published an overview of the resolution tools available in the Banking Union and their impact on a bank’s ability to maintain continuity of access to financial market infrastructure services in resolution.
EBA Consults on Pillar 3 Disclosure Standards for ESG Risks Under CRR
EBA is consulting on the implementing technical standards for Pillar 3 disclosures on environmental, social, and governance (ESG) risks, as set out in requirements under Article 449a of the Capital Requirements Regulation (CRR).
ESAs Issue Advice on KPIs on Sustainability for Nonfinancial Reporting
ESAs Issue Advice on KPIs on Sustainability for Nonfinancial Reporting
