On 16 December 2022, the European Banking Authority (EBA) published a final report on the draft Implementing Technical Standards (ITS) specifying the templates to be used by credit institutions for the provision of information referred to in Article 15(1) of Directive (EU) 2021/2167 in order to provide detailed information on their credit exposures in the banking book to credit purchasers for the analysis, financial due diligence and valuation of a creditor’s rights under a non-performing credit agreement, or of the non-performing credit agreement itself.
The objective of the draft ITS is to provide a common data standard for the sales or transfers of non-performing loans (NPL) across the EU enabling cross-country comparison and thus, reducing information asymmetries between sellers and buyers of NPL, which was previously identified as one of the impediments for the development and efficient functioning of NPL secondary markets in the EU. The report states that having necessary information standardised by means of common templates, data fields with their definitions and characteristics as set out in the draft ITS would facilitate the sales of NPL and aim at reducing entry barriers for small credit institutions and smaller investors wishing to conclude transactions.
The draft ITS are built around the templates to be used for the provision of loan-by-loan information for the sales or transfers of NPL portfolios. The templates cover information regarding counterparties related to the loan, contractual characteristics of the loan itself, any collateral and guarantee provided, any legal procedures and enforcement procedures in place, and the historical collection of loan repayment. The NPL transaction data templates are also complemented by a data glossary and the instructions for filling in the templates.
The draft ITS are based on strong proportionality arrangements, focusing on the sales of portfolios of NPL and setting different information requirements depending on the nature of the borrowers and of the loans included in the portfolios to be sold, by specifying mandatory data fields. Proportionality is further reinforced by allowing all data fields to be treated as not mandatory for certain types of transactions.
These draft ITS have been submitted to the European Commission for adoption.