Response to consultation on Guidelines on management of non-performing and forborne exposures

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Question 1: What are the respondents’ views on the scope of application of the guidelines?

In our opinion, the Guidelines are in scope with current best practice tools and measurements in restructuring and work-out departments. Nevertheless, please note our remarks concerning the proportionality principle in the attachment.

Question 2: What are the respondents view of the proposed threshold of 5 % NPL ratio?

Please see our argumentation concerning the proposed threshold and the definition of the NPL ratio in the attachment.

Question 3: Do you see any significant obstacles to the implementation date and if so, what are they?

We believe that the implementation date by end of 2018 is viable for the majority of institutions since most of the foreseen measurements are already implemented and in use, but considering the fact that especially for some small institutions (e.g. for those with balance sheet size of less than EUR 3bn) some demands would require further investments and upgrades of their existing systems with longer implementation deadlines. 1 January 2019 deadline therefore seems to be too strict and too ambitious and propose its extension by least one year.

Question 4: Does section 4.3.2 capture all relevant options available for credit institutions to implement their NPE strategy?

Most of the foreseen measurements are already implemented and in use. We agree with the proposal.

Question 5: Do you see any significant obstacles to the operationalisation of the NPE strategy as described in chapter 5?

We have not identified any particular obstacles for implementation.

Question 6: Does the viability assessment of forbearance measures capture all relevant aspects?

Credit institutions have already implemented mentioned measures and are able to demonstrate, based on reasonable financial information, that the borrower is able to service its financial liabilities.

Question 7: What are the respondents view on the proposed requirements for recognition of non-performing and performing/non-performing forborne exposures?

Institutions' policies seem to be in compliance with Annex V of Regulation (EU) 680/2014.

Question 8: What are respondents view on the requirements on timeliness of impairments and write-offs of NPEs?

Institutions' policies seem to be in compliance with Annex V of Regulation (EU) 680/2014.

Question 9: Do you have any significant objection against the proposed threshold for property-specific valuation (EUR 300,000)?

We would propose to increase the threshold to EUR 500,000 which would be valid up to 24 months, except when collateral is subject to divestment or materially adverse changes occurred (please see also our comment in the attachment).

Question 10: Do the requirements for valuation of movable property collateral capture all relevant aspects?

We suggest to set a threshold below which the requirements of these paragraphs would not apply (e.g. EUR 300,000 – please see also our comment in the attachment).

Name of organisation

The Bank Association of Slovenia (Zdruzenje bank Slovenije)