Dáil Éireann Debate, Tuesday - 20 March 2018
72. Deputy Michael McGrath asked the Minister for Finance if a buy-to-let mortgage which has been on interest only since its commencement by agreement between a bank and a borrower can be classified as a non-performing loan; and if he will make a statement on the matter. [11977/18]
View answerAs Minister, I cannot comment on agreements made between a bank and a borrower. However, the Central Bank has provided the following information in relation to the classification of a non-performing loan:
As per the EBA Implementing Technical Standards on supervisory reporting and the ECB Guidance on non-performing loans, non-performing exposures are those that satisfy either or both of the following criteria:
1. material exposures which are more than 90 days past-due;
2. the debtor is assessed as unlikely to pay its credit obligations in full without realisation of collateral, regardless of the existence of any past-due amount or of the number of days past due.
There are instances where an exposure can remain a non-performing exposure, notwithstanding the fact that there are agreed forbearance terms with a lender and the borrower is meeting those terms. This can include instances attributable to the criteria outlined in point 2 above.
Again to reference the EBA Implementing Technical Standards on supervisory reporting;
When forbearance measures are extended to non-performing exposures, the exposures may be considered to have ceased being non-performing only when all the following conditions are met:
a. the extension of forbearance does not lead to the recognition of impairment or default;
b. one year has passed since the forbearance measures were extended;
c. there is not, following the forbearance measures, any past-due amount or concerns regarding the full repayment of the exposure according to the post forbearance conditions. The absence of concerns has to be determined after an analysis of the debtor’s financial situation. Concerns may be considered as no longer existing when the debtor has paid, via its regular payments in accordance with the post-forbearance conditions, a total equal to the amount that was previously past-due (if there were past-due amounts) or that has been written-off (if there were no past-due amounts) under the forbearance measures or the debtor has otherwise demonstrated its ability to comply with the post forbearance conditions.
These specific exit criteria shall apply in addition to the criteria applied by reporting institutions for impaired and defaulted exposures.
The full ECB guidance on NPLs and the EBA Implementing Technical Standards are published here:
https://www.bankingsupervision.europa.eu/press/pr/date/2017/html/sr170320.en.html
https://www.eba.europa.eu/documents/10180/449824/EBA-ITS-2013-03+Final+draft+ITS+on+Forbearance+and+Non-performing+exposures.pdf
