Classification of FBEs as non-performing
When granting forbearance measures to performing exposures, credit institutions should assess whether these measures lead to a need to reclassify the exposure as non-performing. Granting forbearance measures to NPEs does not clear their non-performing status: the exposures should continue to be identified as non-performing for at least one year of the cure period after the granting of the forbearance measures, as specified in Annex V (opens EUR-Lex in a new tab) to Commission Implementing Regulation (EU) No 680/2014 (opens EUR-Lex in a new tab) and in section 7.3.3.
When assessing if FBEs should be classified as non-performing, credit institutions should assess if exposures:
a) are supported by inadequate payment plans (either initial or subsequent payment plans, as applicable) that encompass, inter alia, a repeated failure to comply with the payment plan, changes to the payment plan to avoid breaches or the payment plan’s resting on expectations that are not supported by macroeconomic forecasts or by credible assumptions on the repayment capability or willingness of the borrower;
b) include contract terms that delay the time for the regular repayment instalments on the transaction, in such a way that its assessment for a proper classification is hindered, such as when grace periods of more than two years for the repayment of the principal are granted;
c) include de-recognised amounts that exceed the accumulated credit risk losses for NPEs with a similar risk profile.