Czech National Bank measure 165 / 1994 Coll.
Measures by the Czech National Bank laying down the principles for the classification of claims on loans and reserve formation and the adjustments to these claims
Valid
Measures
Text versions:
11.08.1994
165
MEASURES
Czech National Banks
of 4 July 1994
laying down the principles governing the classification of credit claims and the formation of reserves and the adjustments thereto
Czech National Bank pursuant to § 15 of Act No. 21 / 1992 Coll., on Banks, states:
Basic provisions
(1) This measure applies to banks and branches of foreign banks operating in the Czech Republic (hereinafter referred to as "the bank ').
(2) Banks shall classify their claims on loans granted to clients, including those arising from the implementation of guarantees (hereinafter referred to as "claims"), and shall account for the claims in accordance with the principles laid down in this measure. The classification of claims is the basis for the formation of reserves and adjustments to the bank.
(3) The classification of claims is carried out on the basis of an evaluation of the current accounting year or periods preceding that. The classification of the claims expresses the level of expected risks and potential losses.
(4) The banks create reserves and adjustments of sufficient amount. Reserves are used to cover general risks of receivables. The adjustment appropriations shall cover the risks associated with a specific claim or group of claims with the same level of risk.
(5) For the purposes of this measure, the client of the bank is legal and natural persons.
Category of claims
(1) A claim means a principal, including interest and charges.
(2) The Bank shall assess the claim in accordance with the criteria set out in Sections 4, 5, 6, 7 and 8 of this measure and include it in one of the following categories:
(a) standard claims;
(b) the claims observed;
(c) non-standard claims;
(d) dubious claims;
(e) loss-making claims.
(3) The observed, non-standard, doubtful and loss-making claims are called classified claims.
(4) In assessing the claim, the bank does not take into account the amount and quality of its collateral.
(1) In addition to the assessment according to the criteria set out in Section 2 (2), the bank shall carry out its own assessment of the claim based in particular on the present value of the future collection. The Bank also takes into account other external economic and political factors and conditions that may affect the quality of the claim in the assessment.
(2) Where, on the basis of the application of the own assessment methods referred to in paragraph 1, the amount of any loss is greater than that corresponding to the inclusion of the claim under Paragraph 2 (2), the bank shall include the claim in the higher risk category.
(3) The Czech National Bank is entitled to decide to include the claim in the relevant category by way of derogation from the classification carried out by the Bank in cases where the Bank classified the claim in contravention of this measure.
(4) The bank shall keep a register of classified claims broken down into past and past claims.
Standard claims
(1) Standard claims are claims repaid by the debtor under agreed conditions. The debtor is in a favourable financial and pension situation and there is no reason to doubt the timely settlement of the bank's entire debt.
(2) In the standard debt category, claims on debtors meet all of the following criteria:
(a) repayments of principal, interest or charges are duly paid or are less than 31 days overdue;
(b) the bank has sufficient information on the debtor's financial and pension situation within 30 days from the date on which they were to be available to the bank;
(c) none of its claims have been restructured in the last three years due to its difficult financial and pension situation.
Observed claims
(1) The claims observed are claims which can be expected to be paid in full by the principal, interest and fees. However, there has been a deterioration in the criteria for the repayment of principal, interest and charges since the loan was granted but no loss is expected at the time of the assessment of the claim.
(2) In the category of debt to be monitored, claims on debtors shall be reported meeting at least one of the following criteria:
(a) repayments of principal, interest or charges are payable for more than 30 days and less than 91 days;
(b) the bank does not have sufficient information on the debtor's financial and pension situation for more than 30 days and less than 91 days from the date on which they were to be available to the bank;
(c) on the basis of information on the debtor's financial and pension situation, the bank revised the debt repayment plan more than six months ago and less than three years ago.
Non-standard claims
(1) Non-standard claims bear a significant degree of risk. The repayment of principal, interest and fees in full is uncertain. Partial repayment of the claim is highly likely.
(2) In the non-standard debt category, claims on debtors shall be reported meeting at least one of the following criteria:
(a) repayments of principal, interest or charges are payable for more than 90 days and less than 181 days;
(b) the bank does not have sufficient information on the debtor's financial and pension situation for more than 90 days and less than 181 days from the date on which they were to be available to the bank, or the information on the borrower indicates that the repayment of the claim in full at the time of its maturity is uncertain;
(c) on the basis of information on the debtor's financial and pension situation, the bank revised the debt repayment plan less than six months ago.
Doubtful claims
(1) Doubtful claims have all the deficiencies contained in the assessment of non-standard claims, with full repayment of principal, interest and charges being highly unlikely on the basis of commonly available information. Partial repayment of the claim is possible and likely.
(2) In the category of doubtful claims, claims on debtors meeting at least one of the following criteria are reported:
(a) repayments of principal, interest or charges are payable for more than 180 days and less than 361 days;
(b) the bank does not have sufficient information on the debtor's financial and pension situation for more than 180 days and less than 361 days from the date on which they were to be available to the bank, or the information on the borrower indicates that the full repayment of the claim at the time of its maturity is highly unlikely.
Loss claims
(1) Loss claims appear to be irrecoverable or recoverable only partially at very low value. The partial return on the claim may be feasible in the future. The Bank shall endeavour to repay these claims until it is established with certainty that further repayment is impossible. If the impairment of the claim is permanent, the bank shall write off the claim.
(2) In the loss-absorbing category, claims on debtors meeting at least one of the following criteria are reported:
(a) repayments of principal, interest or charges are payable after 361 days or more;
(b) the bank does not have sufficient information on the financial and pension situation of the debtor 361 or more days from the date on which they were to be available to the bank, or the information on the debtor shows that repayment of the full amount at the time of its maturity is impossible.
(3) The bank shall report the claim as loss-making if the debtor is in bankruptcy or compensatory proceedings.
Provisions and adjustments
(1) The bank shall calculate the depreciation of claims on the nominal value of claims by category of claims classified using the following coefficients:
| a) u sledovaných pohledávek | koeficientem 0,05; |
| b) u nestandardních pohledávek | koeficientem 0,2; |
| c) u pochybných pohledávek | koeficientem 0,5 a |
| d) u ztrátových pohledávek | koeficientem 1,0. |
(2) The calculated write-down in the value of the claims is covered by the bank's total of the reserves and adjustments to those claims.
(3) When creating reserves and adjustments, the bank may deduct the collateral of the relevant claim but shall take into account the amount and quality of the collateral. The justification and adequacy of the amount of reserve formation and the adjustment appropriations must be demonstrated by the bank.
Accounting for classified claims
(1) The bank shall classify the classified claims as follows:
(a) claims on non-bank entities other than those referred to in (c) belonging to:
(aa) in the category of outstanding amounts to SYU 244 - Other classified loans,
(ab) in the category of non-standard claims to SYU 243 - Non-standard loans;
(ac) in the category of doubtful claims to SYU 241 - Doubtful loans,
(ad) in the category of loss claims to SYU 242 - Loss loans.
The adjustment items shall be classified in SYU 249 - Credits;
(b) claims on banks belonging to the category of monitored, non-standard, doubtful and loss-making claims in the analytical register under SYU 138 - Non-liquid loans.
The adjustment items shall be classified in SYU 139 - The adjustment item for illiquid loans;
(c) claims on administrative authorities and units of local government (including claims on public funds) belonging to the category of monitored, non-standard, doubtful and loss-making claims in the analytical register under SYU 281 to 283 - Loans granted to the authorities of the Republic, local authorities and public funds.
No adjustments can be made to these claims.
(2) If the claim meets the conditions of classified claims, the bank shall not report that claim or part thereof in other synthetic accounts [claims referred to in paragraph 1 (a) and (b)] or other accounts in the analytical register not classified under the relevant category [claims referred to in paragraph 1 (c)].
(3) The bank shall keep a supervised, non-standard, dubious or loss-making claim on the relevant synthetic account (claims referred to in paragraph 1 (a) and (b)) or the relevant account in the analytical record (claims referred to in paragraph 1 (c)) at all times in its outstanding amount. At the same time, the bank shall classify all other claims on the same client in the same synthetic account or under the same category, even if their maturity has not yet occurred.
Reporting of claims
(1) The statement of claims according to their classification and the statement of claims outstanding within the deadline (hereinafter referred to as "the report") shall be drawn up in accordance with the models. The binding reporting patterns, including the reporting instructions, are annexed to this measure.
(2) The Bank shall compile quarterly reports based on accounting data and submit them to the Czech National Bank no later than 30 calendar days following the last day of the reported quarter. The Czech National Bank is entitled to request more frequent reporting where justified.
(3) The report for the previous calendar year, drawn up on the basis of preliminary information, will be submitted by the Bank to the Czech National Bank in accordance with paragraph 2. The report for the past calendar year drawn up on the basis of definitive data will be delivered by the Bank to the Czech National Bank no later than 10 March of the following calendar year.
(4) The report shall be signed by two persons authorised to act on behalf of the Bank and responsible for the management of the Bank as a whole. The internal control function of the Bank shall verify the completeness and accuracy of the data contained in the reports.
(5) The Bank will ask the auditor designated under the special regulation (1) to verify and draw up a report on this,
(a) whether the system for the classification of claims and the reporting system is built in such a way as to show faithfully the classification of claims and the creation of reserves and the adjustments to those claims;
(b) whether the reporting data for the previous calendar year are complete and correct.
(6) The Bank shall submit a report to the Czech National Bank pursuant to paragraph 5 by 30 April of the following year at the latest.
Final provisions
(1) The Bank will issue an internal regulation which will, in accordance with this measure, adjust the principles of the classification of credit claims and reserve formation and the adjustments to those claims in the Bank.
(2) The internal regulation referred to in paragraph 1 shall be submitted by the Bank to the Czech National Bank within two months of the effective date of this measure. The Bank will also submit to the Czech National Bank any amendments and additions to the Internal Rules immediately after their adoption.
(3) The Bank is obliged to send to the banking supervision of Česká národní banka reports pursuant to § 11 starting with the reports on 30.9.1994.
(4) The effective date of this measure shall not be referred to in the "Principles for the creation of reserves and adjustments to bank risk assets' drawn up by the Czechoslovak State Bank.
Efficacy
This measure shall take effect on the day of its publication.
Governor:
Ing. Tošovský v. r.
Příloha č. 1
Annex No 1
Příloha č. 2
Annex No 2
Příloha č. 3
Annex No 3
CZECH NATIONAL BANK
Banking Supervision Policy Department
Instructions for the compilation of claims reports according to their classification and claims reports outstanding within the deadline
1. Reporting of claims according to their classification
Sl. 1
The amount of all principal claims broken down by risk category shall be reported.
2
The amount of all outstanding interest and charges claims, including penalties (regardless of the accounting method), broken down by risk category, shall be reported.
S5
The theoretical calculation of the impairment of the claim on the nominal value of the claim under Article 9 (1) of the measure shall be provided.
L6
The amount of provisions created pursuant to § 5 (1) (a) and (b) and § 8 of the ČNR Act No. 593 / 1992 Coll., on provisions for the determination of the income tax base, as amended by Act No. 157 / 1993 Coll. and Act No. 323 / 1993 Coll., the amount of provisions created by the Bank for claims in excess of that Act and the amount of adjustments made to the classified claims (aggregate number on the 29 reports).
Binding to the report Bil (CNB) 1-12 Monthly balance of assets and liabilities
11, 3 reporting) = 33, 6 balance sheets
12, 3 reporting) = 44, 2 to 5 balance sheets
1) = 43, 2 to 5 balance sheets
1) = 41, 2 to 5 balance sheets
1) = 42, 2 to 5 balance sheets
16, S3 reporting 1) = S33, S6 + S40, S2 to 5 balance sheets
1) = 25, 2 to 5 balance sheets
Article 28 (3) of the report1) = 30 (2) to (5) of the balance sheet
29, sr6 reporting 2) = sr40, sr1 + part Sr137, sr6 + part Sr138, sr6 balance sheet
2. Reporting of claims outstanding within the deadline
Sl. 1 - Sl. 5
The amount of all claims of the bank outstanding within the maturity period, i.e. principal, interest and charges, including penalties (irrespective of the accounting method), broken down by risk category and by number of days past due, shall be reported.
L7
The amount of all other claims on securities due by the bank shall be reported.
Binding to the report Bil (CNB) 1-12 Monthly balance of assets and liabilities
11, S8 reporting 3) = S33, S6 balance sheet
12, sv. 8 reporting 3) = Sv. 44, sv. 2 to 5 balance sheets
3) = 43, 2 to 5 balance sheets
* * * * * * * *
3) = 42, 2 to 5 balance sheets
6 + 40, 2 to 5 balance sheets
22, p. 8 reporting 3) = 25, p. 2 to 5 balance sheets
Article 28 (8) reporting (3) = 30 (6) balance sheet
1) § 22 of Act No. 21 / 1992 Coll., on Banks.
1) Binding to 3 reports is valid only if the bank accounts for outstanding interest and fees in the same account as the principal claims.
(2) On this row, the bank shall report: (a) the adjustments, (b) the statutory reserves, (c) the provisions of the other actually created on claims.
3) Binding to S8 reports is only valid if the bank accounts for outstanding interest and fees in the same account as the principal claims.
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Regulation Information
| Citation | Measure Česká národní banka č. 165 / 1994 Coll., laying down the principles for the classification of claims on loans and reserve formation and adjustments to these claims |
|---|---|
| Regulation Type | Measures |
| Author | - |
| Collection | Code of Laws |
| Date of Promulgation | 11.08.1994 |
|---|---|
| Effective from | - |
| Effective until | - |
| Status | Valid |
The regulation text is for informational purposes only.
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