Financial Regulatory Developments Focus — Issue 44, November 7

Bank Prudential Regulation & Regulatory Capital

European Banking Authority Final Guidelines on Managing Non-Performing and Forborne Exposures

On October 31, 2018, the European Banking Authority published a final report setting out finalized Guidelines on management of non-performing exposures (NPEs) and forborne exposures (FBEs). The EBA consulted on a draft of the Guidelines in March 2018. The aim of the Guidelines is to help to reduce NPEs on banks' balance sheets by providing supervisory guidance to ensure that credit institutions effectively manage NPEs and FBEs on their balance sheets.

The final Guidelines cover: (i) key elements for developing and implementing an NPE strategy; (ii) the key elements of governance and operations in relation to an NPE workout framework; (iii) governance and operations in relation to FBEs; (iv) governance and operations for NPE recognition; (v) NPE impairment measurement and write-offs; (vi) collateral valuation of immovable