125. When determining whether there is a significant increase in credit risk for a modified lending …

When determining whether there is a significant increase in credit risk for a modified lending exposure, credit institutions should be able to demonstrate, and should take into account when developing ECL estimates, whether such modifications or renegotiations have improved or restored the ability of the credit institution to collect interest and principal payments compared with the situation upon initial recognition. Consideration should also be given to the substance of modified contractual cash flows as well as the implications of the modifications for the future credit risk of the lending exposure (taking into consideration the obligor’s credit risk). Factors to consider include, but are not limited to, the following:

• a. whether the modification or renegotiation of the contractual terms and resulting cash flows is economically beneficial to the obligor, compared with the original, unmodified contractual terms, and how the modification economically affects the obligor’s ability to repay the debt;
• b. whether factors can be identified that support a credit institution’s assessment of the obligor’s ability to repay the debt, including circumstances leading up to the modification, and future prospects of the obligor as a result of the modifications, considering current conditions, macroeconomic forecasts, and prospects for the sector/industry within which the obligor operates, the obligor’s business model, and the obligor’s business (management) plan that outlines the obligor’s expectations of its future performance, financial resilience and cash flows; and
• c. whether the obligor’s business plan is feasible, realisable and consistent with the repayment schedule of interest and principal under the modified contractual terms of the lending exposure.

1. Forbhreathnú

1.1 Tagairtí

1.2 Ceanglais aitheanta

1.3 Caighdeáin ghaolmhara

2. Ceanglais aitheanta

3. Caighdeáin ghaolmhara

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