Halister News

(Bloomberg) -- Guidelines address the lack of a common and internationally applicable definition of non-performing exposures and forbearance, a credit positive for banks, Moody’s says.

• Guidelines will help:
  • Harmonize the definition and treatment of banks’ problem loans
  • Reduce discrepancies in the recognition and treatment of problem assets
  • Make international comparisons less challenging
• Guidelines extend non-performing category to all exposures >90 days past due, or where full repayment isn’t likely
• Non-performing exposures can be re-categorized as performing only after certain conditions met, which will increase stock of non-performing exposures for some banks
• Forbearance can apply to performing, non-performing exposures, is defined as “a concession granted on exposures where counterparties have financial difficulties, and which the bank would not otherwise have considered”
• International standard “will require cross-border banks to implement a common definition of problem assets, forcing them to address rising risks in timely manner”
  • It will mean “some disclosure requirements whereby banks will have to publish amounts of non-performing and forborne exposures”
  • Guideline doesn’t address other discrepancies, including definition of default
• LINK: http://tinyurl.com/l8grtes