Transcript m4reportloans

Results of the AEG e-discussion on
Non-performing loans —
impact on FISIM
UN STATISTICS DIVISION
Economic Statistics Branch
National Accounts Section
Non-performing loans —
impact on FISIM
Introduction
 The issue was unresolved
 3 options were suggested :
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Continue to estimate FISIM on NPLs and allocate it to
the corresponding borrowers but consider how
unpaid FISIM is recorded in the accounts in such a
way as to increment principal outstanding
Estimate FISIM on interest received (rather than
receivable) and on interest payable so that FISIM is
not attributable to NPLs
Estimate FISIM on a basis including NPLs but allocate
the whole amount of FISIM only to those borrowers
servicing their loans
Non-performing loans —
impact on FISIM cont
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Comments
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Some participants regarded option 1 as closest to the 'correct'
option in a system that records NPLs at nominal, rather than
market, values.
However, there are significant reservations about recording FISIM
on NPLs for loans that are 'dead and buried', The view is that
there is no service provided on such loans.
Option 2 says switch to cash accounting, but that creates excess
lumpiness and it doesn’t always give a reliable picture of the
bank’s situation.
Option 3 is internally inconsistent—we can’t say that the interest is
there for some purposes, but not for others.
Option 4 also results in inconsistencies.
Non-performing loans —
impact on FISIM cont
Results
Total
Yes
No
1. Option 1: Same as 93 SNA, any FISIM
on unpaid interest must be accrued
as part of the principal outstanding
22
21
1
2. Option 2: Record interest on a cash
rather than an accrual basis
12
1
11
3. Option 3: the implication is that (SNA)
interest can not be derived by the
reference rate and stock of perf. loans
12
4. Option 4: when the valuation of loans
change from nominal to market value
12
5. Alternative option?
4
No
opinion
12
1
11
1
1
2
Non-performing loans —
impact on FISIM cont
Conclusion
The consultation shows that most of the
AEG members participating support
Option 1 on the treatment of FISIM on
NPL
Thank You