Response to consultation on Guidelines on the application of the definition of default

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1. Do you agree with the proposed definition of technical defaults? Do you believe that other situations should be included in this definition? If yes, please provide detailed proposals on how to address further possible situations.

Please see attached document

2. Do you consider the requirements on the treatment of factoring arrangements as appropriate and sufficiently clear? If not, please provide proposals for additional clarifications.

Please see attached document

3. Do you agree with the approach proposed for the treatment of specific credit risk adjustments?

Please see attached document

4. Do you consider the proposed treatment of the sale of credit obligations appropriate for the purpose of identification of default?

Please see attached document

5. Do you agree that expected cash flows before and after distressed restructuring should be discounted with the customer’s original effective interest rate or would you prefer to use the effective interest rate applicable at the moment before signing the restructuring arrangement? Do you consider the specification of the interest rate used for discounting of cash flows sufficiently clear?

Please see attached document

6. Do you agree that the purchase or origination of a financial asset at a material discount should be treated as an indication of unlikeliness to pay?

Please see attached document

7. What probation periods before the return from default to non-defaulted status would you consider appropriate for different exposure classes and for distressed restructuring and all other indications of default?

Please see attached document

8. Do you agree with the proposed approach as regards the level of application of the definition of default for retail exposures?

Please see attached document

9. Do you consider that where the obligor is defaulted on a significant part of its exposures this indicates the unlikeliness to pay of the remaining credit obligations of this obligor?

Please see attached document

10. Do you agree with the approach proposed for the application of materiality threshold to joint credit obligations?

Please see attached document

11. Do you agree with the requirements on internal governance for banks that use the IRB Approach?

Please see attached document

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Name of organisation

EACB - European Association of Co-operative Banks