EBA欧洲银行-Final-GLs-on-disclosure-of-non-performing-and-forborne-exposures_65页_1mb

Summary of EBA/GL/2018/10 Guidelines on Disclosure of Non-Performing and Forborne Exposures

Core Content

The European Banking Authority (EBA) published the Guidelines on Disclosure of Non-Performing and Forborne Exposures (EBA/GL/2018/10) on 17 December 2018. These guidelines aim to enhance transparency and comparability in the European banking sector by requiring credit institutions to disclose detailed information on non-performing exposures (NPEs), forborne exposures (FBEs), and foreclosed assets. The guidelines are aligned with the European Council’s Action Plan on NPLs from 2017 and are intended to support the management and reduction of NPEs while promoting market discipline.

Main Objectives

• Enhance transparency: Provide meaningful information to market participants about credit institutions' asset quality.
• Reduce information asymmetry: Improve the understanding of credit institutions' risk profiles and the distribution of problematic assets.
• Support sustainable reduction of NPEs: Enable better monitoring and management of NPEs and their impact on banks' financial health.
• Promote comparability: Ensure that institutions with high NPE ratios (≥5%) disclose consistent and detailed data to facilitate cross-institutional analysis.

Key Information

1. Scope and Applicability

• The guidelines apply to credit institutions that are subject to the disclosure requirements under Part Eight of Regulation (EU) No 575/2013 (CRR).
• They cover non-performing exposures (NPEs), forborne exposures (FBEs), and foreclosed assets.
• Proportionality is applied based on the significance of the credit institution and the level of NPEs.

2. Definition of Significant Credit Institutions

Credit institutions are considered significant if they meet at least one of the following criteria:

• One of the three largest in their home Member State.
• Consolidated assets exceeding EUR 30 billion.
• A 4-year average of total assets exceeding 20% of the 4-year average GDP of their home Member State.
• Consolidated exposures exceeding EUR 200 billion or the equivalent in foreign currency.
• Identified as a global systemically important institution (G-SII) or other systemically important institution (O-SII) by competent authorities.

3. Disclosure Templates

There are 10 disclosure templates in total, with some applicable to all credit institutions and others only to significant institutions with a gross NPL ratio of ≥5%.

Templates Applicable to All Credit Institutions

• Template 1: Credit quality of forborne exposures

  • Includes gross carrying amount, accumulated impairment, provisions, changes in fair value, and collateral received.
  • Explains drivers of significant changes over time.

• Template 3: Credit quality of performing and non-performing exposures by past due days

  • Breaks down exposures by past due days and provides explanations for significant changes.

• Template 4: Performing and non-performing exposures and related provisions

  • Includes gross carrying amount, impairment, changes in fair value, and collateral received.
  • Provides detailed breakdown by exposure class and explains changes over time.

• Template 9: Collateral obtained by taking possession and execution processes

  • Provides information on the instruments and value of collateral obtained.

Templates Applicable to Significant Credit Institutions with NPL ratio ≥5%

• Template 2: Quality of forbearance

  • Discloses the number of times an exposure has been forborne and details of non-performing FBEs that failed to meet exit criteria.

• Template 5: Quality of non-performing exposures by geography

  • Breaks down NPEs by country and includes accumulated impairment, provisions, and changes in fair value.

• Template 6: Credit quality of loans and advances by industry

  • Provides a breakdown of NPEs by industry/sector of the counterparty.

• Template 7: Collateral valuation – loans and advances

  • Includes information on collateral and financial guarantees received, with breakdowns by past-due buckets and loan-to-value ratios.

• Template 8: Changes in the stock of non-performing loans and advances

  • Discloses movements in the gross carrying amount of NPLs and net cumulative recoveries.

• Template 10: Collateral obtained by taking possession and execution processes – vintage breakdown

  • Provides information on the value and impairment of foreclosed assets and the vintage of the assets.

4. Frequency of Disclosures

• Templates 1, 3, 4, and 9:

  • Semi-annual for G-SIIs and O-SIIs.
  • Annual for all other credit institutions.
  • Half-year for significant institutions with a gross NPL ratio of ≥5% at the reference date.

• Templates 2, 5, 6, 7, 8, and 10:

  • Annual for significant institutions with a gross NPL ratio of ≥5%.
  • Institutions must start disclosing these templates if they have been at or above the threshold in two consecutive quarters within the four quarters prior to the reference date.
  • Institutions may stop disclosing if they fall below the threshold in three consecutive quarters.

5. Implementation and Compliance

• The guidelines replace certain templates from the previous EBA/GL/2016/11 guidelines.
• Institutions previously required to disclose Template 14 and Template 15 must now comply with the new templates.
• Institutions previously required to disclose Template 12 and Template 13 may choose to comply by using Template 5 and Template 6 or by continuing to use the old templates for defaulted exposures.

6. Reporting Obligations

• Competent authorities must notify the EBA of their compliance or non-compliance with the guidelines by a specific date.
• Notifications should be sent to compliance@eba.europa.eu with the reference 'EBA/GL/2018/10'.
• If no notification is received, the EBA will consider the competent authority as non-compliant.

7. Application Date

• The guidelines apply from 31 December 2019.

8. Purpose and Impact

• The guidelines aim to improve transparency, reduce information asymmetry, and enhance comparability of risk profiles among credit institutions.
• They support effective NPL management, supervisory oversight, and secondary market development by providing standardised and detailed data formats.

Conclusion

These guidelines are a key part of the European Council’s broader strategy to address the cumulative impact of NPEs on the banking sector. By requiring detailed and consistent disclosures, they aim to improve market discipline, risk transparency, and sustainable NPL reduction. The proportional approach ensures that only institutions with significant NPL levels are required to provide more detailed information, balancing regulatory rigor with practicality.