UK Finance has responded to the European Banking Authority’s consultation on its proposed Guidelines on management of non-performing and forborne exposures.
We supported the development of the Guidelines (GLs), whilst observing that Non-Performing or Foreborne Exposures are not a significant issue for UK banks.
We noted however that the implementation deadline of 1 January 2019 may be testing, particularly as the GLs are unlikely to be finalised until q 3 of this year. This would particularly be the case if they were applied too prescriptively, in a way that required banks to change there long established, and effective processes for managing delinquent loans.
We also expressed a concern that the GLs assume a portfolio approach based to NPE management, which is not appropriate for commercial loans, which are often ‘worked-out’ on a case by case basis.