EBA published a discussion paper on review of the standardized nonperforming loans (NPL) transaction data templates, along with the proposed revised NPL data templates. EBA is improving the NPL data templates as a key action in facilitating sales of NPLs and the functioning of the secondary markets for NPLs. The NPL templates are being streamlined to help banks better prepare as part of their NPL management strategies in the aftermath of the COVID-19 pandemic, while addressing information asymmetries to promote price discovery between buyers and sellers. The comment period on this discussion paper ends on August 31, 2021 and EBA expects to published the revised version of the data templates by December 2021.
With this consultation, EBA opens a discussion with market participants on a number of aspects of the templates such as the design, data fields to be included, and their criticality and availability. The discussion paper proposes a number of changes to the existing templates, such as restructuring of the data categories, design of asset classes, reduction of data fields, and categorization of these data fields as critical and non‐critical, and presents proportionality considerations. The revised templates, as presented in this discussion paper, reduce the number of data fields to 230 from 462 in the existing version of the templates and reduce the number of critical cells from 155 to a range of 30–70 (depending on the asset class). Data fields cover the same seven asset classes of the existing version of the templates. In addition to these changes, the 17 data categories in the existing version of the templates have been reduced and restructured into the following five templates to simplify their use for market participants:
- Counterparty template covers information on counterparty group and the counterparty.
- Relationship template merges, in a single template, any relationship, such as borrower‐loan, tenant‐lease, and guarantor‐guarantee, that the contractual agreement may imply. The template also indicates the relationship between contractual agreement and any property or non‐property collateral.
- Financial instrument template merges data on financial instrument for loan and lease contracts as well as any forbearance information applicable.
- Collateral and enforcement template covers data on any property and non‐property collateral related to contractual agreement on the financial instrument as well as any relevant information on the enforcement procedures that may apply to collateral.
- Collection and repayment template covers information on external collection and historical collection and repayment schedule related to the financial instrument. Certain data fields with respect to the payment schedule require information for the next 36 months while data fields related to historical balances require information on payment history for the past 36 months.
Annexes to the discussion paper contain templates and instructions for NPL data, present data dictionary, and explain changes with respect to the existing version of the NPL data templates. The proposed revisions to the templates are based on the user experience and feedback from various market participants and are in response to the December 2020 communication from EC on tackling NPLs in the aftermath of the COVID-19 crisis. The revisions will enable price discovery in a consistent way across the single market. EBA will await the finalization of the draft Directive on credit servicers, credit purchasers, and the recovery of collateral. In case the final version of that Directive mandates EBA to develop implementing technical standards specifying data templates for provision of information from NPL sellers to purchasers, EBA will later issue a consultation paper on the draft standards, with the revised templates developed following this discussion paper forming the basis of this consultation paper.
- Press Release
- Discussion Paper (PDF)
- Revised Templates and Data Dictionary (XLSX)
- Details of Template Revisions (XLSX)
Comment Due Date: August 31, 2021
Keywords: Europe, EU, Banking, NPL, COVID-19, Credit Risk, Reporting, Templates, Secondary Market for NPLs, EBA
Leading economist; commercial real estate; performance forecasting, econometric infrastructure; data modeling; credit risk modeling; portfolio assessment; custom commercial real estate analysis; thought leader.
Previous ArticleBaFin Publishes Supervisory Priorities for 2021 and FAQs on IFR
The Board of Governors of the Federal Reserve System (FED) published the final rule that amends Regulation I to reduce the quarterly reporting burden for member banks by automating the application process for adjusting their subscriptions to the Federal Reserve Bank capital stock, except in the context of mergers.
The European Banking Authority (EBA) published its assessment of risks through the quarterly Risk Dashboard and the results of the Autumn edition of the Risk Assessment Questionnaire (RAQ).
The Malta Financial Services Authority (MFSA) updated the guidelines on supervisory reporting requirements under the reporting framework 3.0.
The Hong Kong Monetary Authority (HKMA) published a circular, along with the reporting form and instructions, for self-assessment, by authorized institutions, of compliance with the Code of Banking Practice 2021.
The Financial Conduct Authority (FCA) decided to register European DataWarehouse Ltd and SecRep Limited as securitization repositories under the UK Securitization Regulation, with effect from January 17, 2022.
The European Commission (EC) published the Delegated Regulation 2022/25, which supplements the Investment Firms Regulation (IFR or Regulation 2019/2033) with respect to the regulatory technical standards specifying the methods for measuring the K-factors referred to in Article 15 of the IFR.
The Bank of International Settlements (BIS) published a paper that assesses the ways in which platform-based business models can affect financial inclusion, competition, financial stability and consumer protection.
The Central Bank of Egypt (CBE) published a circular with instructions on emergency liquidity assistance to banks that are unable to meet their liquidity requirements.
The European Supervisory Authorities (ESAs) published the list of identified financial conglomerates for 2021.
The Australian Prudential Regulation Authority (APRA) updated the list of authorized deposit-taking institutions, granting license to Barclays Bank PLC and Crédit Agricole Corporate and Investment Bank to operate as foreign authorized deposit-taking institutions under the Banking Act 1959.