The new EBA NPL transaction templates are expected to become mandatory for European banks for non-performing loan (NPL) portfolio sales after the publication of the implementing technical standards in the official journal of the European Union later in 2023. We report on our experience in transforming the data shared with investors as part of actual NPL portfolio sale on the NPL Markets transaction platform.
We found the following aspects are important for sellers to consider:
1) The EBA NPL templates are establishing a common standard for all types of NPL portfolio sales across many jurisdictions. As such, they will differ substantially from non-standardised data used in prior transactions. Most selling banks will need to provide data fields that they did not provide before and some of their previously provided information is not part of the EBA NPL templates.
2) Sellers should expect that there are a few mandatory data fields that they will not have readily available. EBA has clarified that the NPL templates are not a regulatory reporting requirement and the non-delivery of certain mandatory fields will likely not result in sanctions or penalty fees. It remains to be seen, however, how competent authorities in each jurisdiction will monitor the new templates and react to potential non-compliance.
3) Creating investor data tapes in the EBA NPL template format is not a particularly complex, time consuming nor expensive task when compared with the creation of investor data tapes currently used by sophisticated sellers. Data mapping software can help with the creation of the EBA NPL template and running detailed validation checks which means that the process of creating standard validated template outputs, after the initial setup, can be largely automated and near instant.
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