EBA Q&A · 2016_2842
Realisation of collateral and unlikeness to pay
Final Q&Afiled under Regulation (EU) No 680/2014 - ITS on supervisory reporting of institutions (repealed) (repealed)Submitted 22/07/2016 · published 03/02/2017
Question · verbatim
Is exposure considered non-performing according to Art 145(b) ITS also in the case where: (i) the debtor is assessed as unlikely to pay its credit obligation without collateral either being repossessed or sold voluntarily; (ii) a voluntary sale is assessed as highly feasible.
Background provided by the submitter · verbatim
Some customers receive a term extension up to the retirement age. They are assessed as unlikely to pay their credit obligation without collateral either being repossessed or sold voluntarily. The exposures are classified for the first 12 months as NPL, impaired and non-defaulted. However, after 12 months, these loans are re-classified to performing, non-impaired and non-defaulted.
Answer · verbatim
According to Part 2, paragraph 148 of Annex V to Regulation (EU) No 680/2014 (ITS on Supervisory Reporting), the classification of exposures as non-performing should be done without taking into account the existence of any collateral. Consequently, fully collateralized exposures in unlikely-to-pay situations should be classified as non-performing, even when it is assumed that the customer is willing to realise the collateral on a voluntary basis in order to avoid a legal enforcement by the credit institution.
Source: EBA Single Rulebook Q&A 2016_2842 · text as published, not rephrased · collected on 2026-10-08