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

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Question 1: Could you provide your views on whether adding an “of which” column to column ‘f’ of template 1 - “Credit quality of forborne exposures”, including the information on non-performing forborne exposures that are impaired (i.e. “of which impaired”) would be useful?

Yes, it would be useful to detail the “of which defaulted” and “of which impaired” columns for impairments on non-performing forborne exposures. This would align with the splits shown in columns ‘c’ and ‘d’ for gross carrying amounts on non-performing forborne exposures.

Question 2: Could you provide your views on whether adding the columns with the breakdown of provisions for non-performing exposures by buckets of the number of days that the exposure has been past due to template 3 - “Credit quality of performing and non-performing exposures by aging of past due days” would be useful?

We believe that this may be a useful breakdown, but should be balanced with information on collateral held on exposures as well as the relative risk associated with the different asset classes. Provision levels for exposures to households, for example, may not be fully comparable from lender to lender, as ratios of secured to unsecured lending and underwriting standards can vary significantly between credit institutions.

Question 3: Could you provide your views on whether the breakdown between “on balance sheet exposures” and “off balance sheet exposures” included in template 5 – “Quality of Non-performing exposures by geography” is useful?

We would not fall within scope for this template, as we would not meet the significance criteria and the majority of exposures are domestic.

Question 4: Could you provide your views on whether the information on loans and advances secured with immovable property with a loan-to-value higher than 60% and lower than 80% included in row 3 of template 7 – “Collateral valuation - Loans and advances at cost or amortised cost” is useful?

While we would not fall within scope for this template, we believe the loan-to-value splits are useful for the reader.

Question 5: Do you agree with the overall content of these guidelines and with the templates proposed? In case of disagreement, please outline alternatives that would help to achieve the purpose of the guidelines.

We agree with the underlying principle of addressing deficiencies in disclosure requirements. While some element of proportionality is embedded in the guidelines, the definition of significance outlined in the guidelines would extend to most banks within the UK. While the added NPL threshold is welcomed, we would suggest further consideration of proportionality where credit institutions have sustained small levels of non-performing loans.

The requirements for the 4 templates that all credit institutions will be in scope for, overlap significantly with FINREP reporting requirements and full alignment would limit cost and complexity associated with this change.

Name of organisation

Virgin Money