Sale of non-performing loans to a third party

• Question ID: 2018/0009
• Date of publication: 24/01/2018
• Subject matter: Sold and transferred loans, Written-off loans, Extended quarter-end reporting
• AnaCredit Manual: Part II, Reporting examples
• Data attribute: Transferred amount, Cumulative recoveries since default, Accumulated write-offs, Outstanding nominal amount

Question

In Example 13 in Section 4.4.3 of Part II of the AnaCredit Manual, the outstanding nominal amount is reported including accumulated write-offs, even though, according to the definition of outstanding nominal amounts, written-off amounts should be deducted (see Section 4.4.9, page 85, lines 24-25). Should it not be €15,000, rather than €100,000? We assume that the reporting of €100,000 is related to the reporting of €100,000 for the “transferred amount” attribute, but would it not make more sense to report €15,000 for both of these attributes, as the buyer only pays €15,000?

Another feature of this example is the fact that the “transferred amount” attribute is reported up until the end of the quarter and the counterparty-instrument dataset is updated after the sale, even though the loan is not serviced by the seller after the sale. This is not consistent with Section 3.1.6.1, which states that only the attributes “outstanding nominal amount”, “cumulative recoveries since default” and “accumulated write-offs” are reported for loans that are no longer held or serviced.

Answer

Please note that Example 13 in Part II of the AnaCredit Manual does not correctly reflect the treatment of written-off instruments. The explanations provided in Section 3.1.6 of Part II of the AnaCredit Manual, together with the clarifications provided with regard to Questions 2 and 3 of the Q&A, should take precedence in this regard.

Consequently, the after-sale reporting in Example 13 is revised as follows:

• The instrument is neither held nor serviced by Bank B after the sale, so extended quarter-end reporting applies.
• Thus, the only datasets that are reported are the financial dataset and the accounting dataset (see Section 3.1.6.1 of Part II of the Manual and the Q&A here).
• The financial dataset is reported on 31 October, 30 November and 31 December, whereby:
  • in the extended reporting period, the outstanding nominal amount is, by convention, €0 after the sale (as the instrument is non‑existent from Bank B’s perspective);
  • by convention, the transferred amount is “non-applicable”;
  • the financial dataset is not reported thereafter.
• The accounting dataset is reported on 31 December only, whereby:
  • accumulated write-offs total €85,000;
  • cumulative recoveries since default should be at least €15,000.
• The counterparty-instrument dataset is not reported at all after the sale (see Section 3.1.6.1 of the Manual and the Q&A here), and neither are the remaining datasets.

In addition, please note that the outstanding nominal amount should indeed be reported net of write-offs. However, in this case, this is of lesser relevance, as the outstanding nominal amount is €0 by convention. This seeks to reflect the fact that the instrument is no longer in Bank B’s systems. Also by convention, the transferred amount is reported as “non-applicable”, rather than €0, in line with Part II, page 68, lines 21-22. So, the updated Example 13 is as follows:

Related questions

See also When does the extended quarter-end reporting apply?, Which data attributes are reportable if the extended quarter-end reporting applies?