Annex 1 – Sample criteria for grouping retail NPEs

Natural or legal person:

• a) retail borrower
• b) sole trader
• c) small business or group of professionals
• d) SME (overlaps with corporates).

Arrears bucket/days past due (dpd) (the higher the level of arrears the narrower the range of possible solutions):

• a) early arrears (> 1 dpd and ≤ 90 dpd)
• b) late arrears (> 90 dpd and < 180 dpd)
• c) debt recovery unit (> 180 dpd, including also legal cases (borrowers in relation to whom legal actions have taken place or are in progress)).

Re-restructured cases (restructured loans with arrears, indicative of persistent repayment problems and/or failure of restructuring solution offered):

• a) number of previous restructurings.

Exposure balance:

• a) high value
• b) low value
• c) multiple exposures.

Level of risk (based on credit institution’s assessment/behaviour scoring/internal behaviour data/transaction history/credit rating). Clients with better payment histories are more likely to respond positively to restructuring offers:

• a) very high
• b) high
• c) medium
• d) low.

Based on borrower’s behaviour:

• a) seasonal repayments
• b) cooperative versus non-cooperative.

Purpose of credit facility (by product):

• a) principal private residence loan
• b) secondary home/holiday home loan
• c) investment property loan/buy-to-let loan
• d) personal loan
• e) overdraft account
• f) leased asset
• g) credit card
• h) sole trader, micro-enterprise or SME loan:
• i. for the set-up of the business (premises; infrastructure or machinery; renovations)
• ii. working capital.

Loan currency.

Loan interest rate (interest rate reduction consideration for loans burdened by high interest rates, if possible).

Borrower outlook (borrower’s age, health, employment type and history, employment prospects, professional skills, industry).

Country of residence/incorporation:

• a) residents
• b) non-residents.

Location of the underlying collateral:

• a) rural versus urban
• b) prime location, city centre, outskirts, etc.

Type of underlying collateral:

• a) land:
• i. building plot
• ii. agricultural land
• b) building:
• i. house
• ii. shop
• iii. factory.

Based on the loan-to-value (LTV) ratio:

• a) for low LTV loans, sale of underlying collateral may be the preferred option, unlike for high LTV loans.

Hardship cases (e.g. health problems, separation, divorce).

Borrower’s creditworthiness assessment:

• a) can afford loan repayment versus cannot afford it;
• b) income less expenditure versus reasonable living expenses versus loan instalment.