this negotiations between banking and government to go past Support measures for unprotected mortgages Insolvency due to the rise in Euribor to go forward, but they still have related aspects that they need to close. In this sense, the sector is trying to ensure that extending the maturity of the loans it proposes to the Ministry of Economy up to five years does not force it to set aside additional provisions in order to face possible losses due to future defaults. , the consequent impact on earnings. This is confirmed by various sources, but acknowledging that this demand is difficult to sustain.
The Royal Decree proposal – developed by ‘EFE’ and accessed by the employers’ associations AEB and CECA – conveyed to the Economy at their meeting on Tuesday – The two points are marked as pending negotiation. On the one hand, applying the measure whatever customer credibility assessment. On the other hand, the extension of the maturity of the loans is not counted for the purpose of the provision, that is, the said loans are not taken into account.or they are generally reclassified in the ‘special surveillance’ category.
this most loans, including mortgageclassified in the ‘normal risk’ categoryIncludes operations where the default risk has not increased significantly since initial recognition. For this reason, regulations oblige banks to hold a provision equivalent to the expected loss in twelve months. On the other hand, non-performing loans with a significantly increased risk of non-payment fall into the category of ‘normal risk under special supervision’, which forces businesses to reserve a portion of the expected loss over the full term. the life of the loan.
Flexibility
Banks argue that in the current context and as a support measure for sensitive mortgages, extending the maturity to five years should not be understood as a significant increase in default risk, which generally forces loans into private custody. and therefore too much to make further provisions. They understand that these provisions must be made when the mortgagee ceases to pay for more than three months and therefore defaults. However, it is recognized that accounting regulations are not entirely precise in this regard and therefore a flexible treatment is recommended in the first phase of the pandemic, as permitted by the European Banking Authority (EBA).
In any event, it is unclear whether a national law would allow such flexibility unless protected by a European institution such as the EBA. And in any case, Nadia Calviño, vice president of economics, reiterated this Thursday that she doesn’t want a one-star measure, such as an industry-recommended extension of time for mortgagers in trouble. Thus, she reiterated for the second day in a row that her ministry and the industry were working on a “socks catalogue”.
Insufficient
After meeting with Christine Lagarde, President of the European Central Bank (ECB), the Vice-President said, banks’ “commitment and participation” in reaching an agreement. “The financial sector puts different offers on the table. I welcome all offers, the teams are currently analyzing them in Madrid and working hard to see which ones can be most effective as soon as possible.” .
Labor Minister Yolanda Díaz said it was “not enough” for banks to offer mortgage extensions and demanded that they “go further”. In that sense, CaixaBank has also proposed freezing vulnerable mortgage quotas for a year as this paper progresses.