Clients who ask the bank to renegotiate their mortgage credit, in order to mitigate the impact of the sudden increase in installments, will be “flagged” as higher risk customers if, in the process of analyzing the case, the bank determines that this renegotiation is caused by “financial difficulties”. European regulation obliges banks to always be attentive to signs of deterioration in the financial capacity of clients and, if a renegotiation takes place on that basis, said recognition penalizes the capital of the entities -which is something that will not be “forgotten” later, in case you need a new loan in the future. Y even in other institutions the brand will be maintained, “because other banks are not stupid”tells a banker to the Observer.
The Bank of Portugal came a few days ago to clarify that there is no “specific brand” of clients who initiate credit renegotiation processes under the new legislation presented by the Government in November. but this is one reference only to any mark in the Credit Responsibility Center (CRC), the platform managed by the Bank of Portugal and can be consulted by all banks (and by the people themselves) to find out information about what credit each one has. However, when it comes to “marking”, The story does not end there.
As recognized by the Bank of Portugal itself, credit renegotiations carried out under the new legislation will be included in the Default Risk Action Plan (PARI), a regime that was created precisely to prevent situations of financial difficulty from becoming cases of default. That’s why, with legislation for people in financial difficulty (and potential risk of default) at stake, bankers like Paulo Macedo, president of Caixa Geral de Depósitos, said in November that all credit is renegotiated. under this regime will be considered credits in Stage 2.
This classification is linked to the way in which banks account for the risk of the loans they grant to clients and is also crucial in calculating impairment levels (provisions) and regulatory capital ratios that banks have to comply with. In the rules of the European Banking Authority (EBA, in its Anglo-Saxon acronym), a credit that is in stage 1 means that no deterioration in the financial situation of the debtor is detected, stage 2 denotes some degradation in ability to pay and stage 3 refers to a default or restructuring already consummated.
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Source: Observadora
