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1993 SNA Update Information - Country comments for issue:
Non-performing loans

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The financial crises of the 1990s led to renewed interest in the statistical treatment of non-performing loans. The purpose of the review is to determine what criteria should be applied in the SNA to the writing-off of non-performing loans and to make sure that they are consistent with the other major macroeconomic statistical systems (balance of payments, government finance statistics, and monetary and financial statistics).
Country comments
Number of country comments for selected issue:114
  Date postedSourceComment
 11/10/2006ArmeniaThe National Statistical Service of the Republic of Armenia agrees with the most recent AEG recommendations.
 10/10/2006SwedenAgreement with proposal
 29/09/2006Bank of KoreaWe support the option 1, due to the feasibility and the accrual basis.
 15/09/2006United KingdomWe agree with the approach proposed by the AEG but suggest that, in addition to showing the fair value of non performing loans, the nominal value of total NPLs should also be separately recorded - confronting the fair value of N.P.LS with the nominal value of all loans (performing and non performing) will not be of analytical interest without the additional information. We presume the intention is for these items to be standard for all NPLs on the balance sheets of government and the financial sector, including those "with the rest of the World" - the text of the paper is ambiguous and could be understood as implying that these latter might be supplementary.
 15/09/2006LatviaAfter deep discussions and expert consultations we basically support the 1993 SNA Update Issues.
 14/09/2006Bank of LithuaniaWe agree with the AEG recomendations.
 06/09/2006Monetary Agency of Saudi ArabiaIslamic finance is developing rapidly and becoming important part of the commercial banking business in Saudi Arabia, the Gulf area and in many Muslim and non-Muslim countries. This, indeed, may trigger some natural and practical differences in the definition of non-performing loans, since under the practice of Islamic banking loans are chiefly classified by their kind according to Shari'a compliance or non-compliance (i.e Islamic vs. non-Islamic loans). It is frequently quite difficult to exactly determine the interest value of the loan since Shari'a compliant loans by design are used for the purchase of commodities which their book value differs from the market value. In international-national accounting context, this relates to the liability side of the government balance sheet.
 21/08/2006Central Bank of El SalvadorSe está de acuerdo con seguir la recomendación actual del SCN93 en cuanto a este punto y se recomienda que el resto de sistemas de nomenclatura sean convergentes.

The SCN agrees that the existing recommendation contained in the 1993 SNA should be followed, and recommends that the other systems of nomenclature be brought into line.
 18/08/2006NetherlandsWe generally support the recommendations made at the Frankfurt Meeting of the AEG.
 18/08/2006Bank of EnglandThe requirement, for monetary statistics, that loans should be valued at their contractual rather than fair value means that interest should continue to accrue at the contractual rate, even where the loan is impaired. In the context of FISIM, such accruals imply that the provision of a financial service can continue to be imputed even where the loan is non performing. We therefore consider the AEG decision to be correct. Impairment/non performance does not always result in a loan being written off – loan performance can and does often recover so it is important that the service provided to the borrower be fully recognised.
Two issues are nevertheless relevant to this recommendation:
• Source data may measure the accrual of interest somewhat differently. IAS39 AG93 says “Once a financial asset or a group of similar financial assets has been written down as a result of an impairment loss, interest income is thereafter recognised using the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss.” Put simply, the interest recorded as accruing on an impaired loan may be lower than the contractual obligation currently required by SNA because it is written down proportionately to the write down in the value of the impaired asset. While this is a compilation issue, the SNA text might usefully acknowledge this as a potential area of difference between statistical and financial reporting standards.
• The designation of accrued interest may vary. For loans and deposits, the 1993 SNA (¶11.101) provides two options: (1) inclusion of accrued interest in the outstanding amounts of loans and deposits or (2) inclusion of accrued interest in the Other subcategory of Other accounts receivable/payable. By contrast, the MFSM (¶227) states: Accrued interest on deposits, loans, and securities other than shares should be incorporated into the outstanding amount of the financial asset or liability, rather than being treated as part of other accounts receivable/payable. For unimpaired loans the practical impact of the SNA’s alternative treatments is unlikely to be large, but for non performing loans the second treatment would presumably imply a more substantial accumulation of accruals within other receivables and the loss of this component from the FISIM calculation. A decision is therefore needed on whether SNA Rev1 will retain the SNA93 options on the designation of accruals or whether it adopts the later and stricter MFSM treatment.
 18/08/2006SingaporeWe agree in-principle with Option 1, that FISIM should be estimated on NPLs and allocated to the corresponding borrowers. FISIM associated with unpaid interest should also be accrued as part of principal outstanding.
 18/08/2006USAWe agree with the recommendations of the AEG.
 18/08/2006State Bank of PakistanThe issue related to treatment of interest associated with non-performing loan when it is written off. The recording of loan along with interest on accrual basis is a consistent decision.
 02/08/2006European Central BankThe ECB generally supports the recommendations made by the AEG.
 01/08/2006Hong Kong, ChinaWe agree to the AEG’s recommendation that FISIM should be recorded on an accrual basis. The calculation of FISIM also takes into account interest of non-performing loans, because financial intermediation services have been rendered, regardless of whether interest accrued to non-performing loans are subsequently paid or not.
To facilitate analysis on the size of non-performing loans, we suggest adding a memorandum item to show the amount of losses associated with the non-performing loans as expected by banks. The amount of losses associated with non-performing loans may be estimated by making reference to the average value of the losses associated with the non-performing loans, over, say the past 10 years, which is similar to the estimation of adjusted claims in the case of non-life insurance. The value of unexpected loan losses is treated as capital transfers.
 01/08/2006National Bank/ National Bureau for Statistics MoldovaWe support the option 1 of recording the interest on non-performing loans, according to what unpaid interest must be accrued as part of the principal outstanding. This treatment will achieve consistency with BOP concepts.
 01/08/2006Reserve Bank of South AfricaWe carefully worked through all the issues and would like to give our general support to the recommendations made by the AEG.
 31/07/2006Macao SARStatistics and Census Service of Macao SAR agrees to the AEG recommendations and has no further comments.
 31/07/2006Bank of IndonesiaBI agree to the idea that any FISIM associated with unpaid interest from nonperforming loans must be accrued as part of the principal outstanding at nominal value. Indonesia applies 5 classification of loans based on how the debtors can meet the schedule of the nominal and interest payment of loans. The 3 types called NPLs are the loans which are classified as substandard, doubtful, and loss.
 31/07/2006Bosnia and HerzegovinaWe agree with AEG recommendations on the update of the 1993 SNA and do not have any further comments.
 28/07/2006FranceL’INSEE accueille favorablement les conclusions de la réunion de Francfort.
 28/07/2006National Bank of SlovakiaConcerning the results of the most recent AEG meeting, we fully support the conclusions and recommendations made by the AEG.
 28/07/2006AustraliaWe do not agree with the AEG decision to accept option 1. We have significant reservations about recording FISIM on NPLs for loans that are 'dead and buried', but have not been written off because of the 'damage' this would do to the balance sheet. We do not believe that any service is being provided on such loans. For this reason, we favour 'time limiting' FISIM on NPLs. That is, even though we have concerns about recording FISIM on long-standing NPLs, we consider that a FISIM service continues to be provided for loans that are in the early stage of being non-performing even though no cash interest has been paid.
Given that we believe there is FISIM on loans in the early stage of being non-performing, we do not think it is appropriate to allocate this FISIM to other borrowers. These other borrowers are not receiving any service for the NPLs so they should not be charged with the FISIM on NPLs.
 28/07/2006Bank of PortugalBanco de Portugal would like to express general support for the recommendations made in the Frankfurt meeting of the Advisory Expert Group on National Accounts (AEG).
 28/07/2006Bank of PolandPlease find our general support for the AEG recommendations made during its recent meeting in Frankfurt.
 27/07/2006Bank of Sierra LeoneWe agree with the recommendations made by the AEG.
 27/07/2006EgyptWe agree with AEG recommendation. Clear definition is needed for the Non- Performing Loans.
 25/07/2006Central Bank of Costa RicaWe agree with the recommendation of the AEG, because they maintain the symmetry of recording of loans in the core accounts using the debtor approach, on the other side, the introduction of memorandum ítems will give additional information to users on the correspondent values at market prices, especially regarding loans related to government and financial institutions.  We find very important to clearly define what is to be understood as non-performing loans, as well as the method to be used to determine the market value of these loans from the creditor approach, this with the aim to maintain international comparability.  We don’t believe it necessary to extend this treatment to other financial instruments as commercial credits due to the difficulty to gather base data.  Additionally, we are in favor of option 1 as a method to reflect the impact of non-performing loans on FISIM.
 25/07/2006Bank of ItalyWe broadly support the conclusions.
 24/07/2006National Bank of the Republic of AzerbaijanWe have analyzed the “Comment on the recommendations of the most recent Advisory Expert Group on National Accounts (AEG) meeting (January 30 – February 8, 2006) in Frankfurt” within the scope of our responsibilities and I am pleased to inform you that we are in agreement with the AEG recommendations.
 10/07/2006DenmarkAgreement with option 1
 23/02/2006South African Reserve Bank We agree with the AEG recommendations.
 27/01/2006Central Bank of El SalvadorPara el caso nuestro, existe normativa de suspender el devengo de intereses cuando los préstamos dejan de ser redituables. En todo caso, sería interesante tener claridad sobre el tratamiento de dichos intereses cuando los préstamos en mora sobrepasen un porcentaje representativo del total, Además, sería recomendable analizar la posibilidad de ajustar los SIFMI sobre préstamos en mora con las reservas de saneamiento creadas sobre dichos préstamos.
 03/01/2006Singapore(i) We agree with the use of market-equivalent valuation for NPLs, with nominal value less expected loan losses as an alternative, and the use of memorandum item to record the interest arrears.
(ii) We note that it is useful to have an explanatory presentation to show how the memorandum item for stocks of loans and flows of interest are connected.
 22/12/2005Serbia and MontenegroWe agree with the suggested changes.
 14/12/2005FranceL'INSEE soutient les recommandations relatives à cette question (en particulier, maintien dans le cadre central du SCN, de la mesure des prêts à leur valeur nominale et comptabilisation, dans des postes pour mémoire, la valeur d'équivalent de marche des prêts et les arrières d'intérêt).
 13/12/2005CanadaCanada agrees with the proposed definition of a non-performing loan – as payments or interest past due by 90 days or more – as it aligns with business accounting on this issue. The valuation should be market equivalent.
Canada does not believe that FISIM should be allocated to NPLs and that FISIM be calculated in interest received.
 12/12/2005Bank of KoreaWe agree in principle with the AEG in respect that its recommendations can keep the basic framework of the 93 SNA unchanged and fulfill the SNA's general principle of market valuation.
 12/12/2005MexicoSe considera continuar con el principio de registrar a base devengo en el SCN, como actualmente está, y adicionalmente incorporado como una partida memorando dar seguimiento a la base vencimiento de pago, que es la que recomiendan otros manuales, de esa manera se ofrece la suficiente información para que los usuarios deriven las mediciones que consideren adecuadas.
Modificar la base de registro en el SCN no se considera recomendable debido a que se perdería consistencia ya que todas las transacciones son registradas de esa manera, no obstante ello, hacer un punto de excepción en cuentas de orden puede ser recomendable para no perder la armonización con los demás manuales.
 09/12/2005RussiaRosstat largely supports the recommendations on the updating 1993 SNA, made at the July 2005 meeting of the Advisory Expert Group on National Accounts.
 09/12/2005European Central BankOn item 4a, non-performing loans, a final ECB opinion can only be conveyed when some issues have been clarified by the AEG. According to the conclusions of the AEG meeting in December 2004 on this issue, the group agreed that "loans should continue to be recorded at nominal value for both creditors and debtors. In addition, memorandum items should be shown at market value; these should be mandatory for at least financial institutions and government as creditors. More clarification is required in respect of the following: i. The definition of which loans are non-performing; ii. The exact nature of the memorandum items (whether market-equivalent value or nominal value less expected provisions for impairment); iii. A worked example of the accounts showing the memorandum items; iv. Harmonization of terms used in various manuals; v. The implications for the recording of FISIM; and vi. Whether similar treatment should be extended to other financial instruments (in particular trade credits).)" (See paragraphs 23 and 24).
The draft report of the third meeting of the AEG in Bangkok appears to be in contradiction to this decision. It says, in paragraph 80, that the AEG agreed that the "valuation basis for NPLs should be a market equivalent valuation. If a fair value figure is not available, an acceptable alternative is nominal value less expected loan losses." We support the decision taken in New York (December 2004), that all loans, performing and non-performing, should be recorded at nominal value. We further think that the memorandum items (for NPLs) should be based on a rather complete recording of stocks and flows in a supplementary set of accounts. In our understanding, this decision would also apply to the recording of FISIM. Accordingly, we would recommend making more explicit in the text the underlying assumption derived from the December 2004 decision, i.e. to record all loans at nominal value and to collect supplementary information for NPLs. The attached short note outlines this approach.
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 06/12/2005Central Bank of NorwayOne simple loan concept cannot fill all information needs on loans in the macroeconomic statistics. A dual valuation will give “the best” data that are suitable either for assessing the holding positions or the liability positions. Based on the AEG decision to keep the 1993 SNA recommendation that loans should be valued at nominal values, a mandatory memorandum item based on market-equivalent values is a good solution. However, we suggest that the memorandum item should not be limited to non-performing loans but comprise all loans.
 05/12/2005Denmark m3Denmark4a;
 05/12/2005Central Bank of ColombiaEl Banco está de acuerdo con el tratamiento presentado por el grupo de trabajo, según la cual la medición de los préstamos en mora debe hacerse en términos nominales porque mantiene la simetría entre los acreedores y deudores, permite realizar comparaciones con otra clase de activos y mantiene la relación entre acreedor y deudor hasta el final del crédito.
La partida de memorandum puede proporcionar ciertamente una información valiosa que ayuda a los analistas contables, pero debe existir un gran compromiso de parte de las entidades que suministran esta información para que esta partida sea lo mas confiable y veraz posible.
Sin embargo considera que la inclusión de “memorandum ítems”para los préstamos a valor de mercado es útil para el análisis de las estadísticas. No obstante, en el caso colombiano la no existencia de un mercado secundario formal para este tipo de instrumentos, dificulta la construcción de este indicador.
Adicionalmente, sería muy útil definir de una manera más precisa el criterio para determinar si un préstamo se encuentra en mora.
 02/12/2005AustraliaOn the assumption that the recommendations refer to the recording of memorandum items, Australia is in broad agreement with the AEG decisions. As previously stated, we strongly recommend that all loans (including NPLs) be recorded at market value. As this has not been accepted by the AEG we support the recommendations for memorandum items to show market value of loans and interest arrears on NPLs.
Regarding the issue of FISIM on NPLs, Australia agrees that further consideration should be given to this issue.
 02/12/2005TurkeyWe agree with the recommendations made at the July 2005 meeting of the Advisory Expert Group on National Accounts.
 02/12/2005NetherlandsWe generally support the recommendations of the AEG.
 01/12/2005NorwayWe would like the AEG to clarify whether their former recommendation remains valid (i.e to enter loans at nominal value with both debtors and creditors). No further comments.
 01/12/2005BrazilWE agree with the comments from Australia.
 01/12/2005Central Bank of NicaraguaLa estimación del SIFMI debe incluir los intereses por préstamos en mora (préstamos con 90 días o más de retraso) y éstos deben asignarse a los correspondientes prestatarios. A continuación las razones que justifican nuestra posición:
• A pesar que la inclusión de intereses devengados por préstamos en mora alteran el SIFMI de forma positiva, éstos representan una pequeña proporción del total de intereses reportados por los bancos comerciales (menos del 2.5 por ciento para los últimos tres años).
• En el caso de que se excluyeran los intereses atrasados de los préstamos en mora en el cálculo del SIFMI en el año t, y bajo el supuesto de que algunos de los prestamistas en mora podrían reanudaran sus pagos atrasados en t+1, se deberían separar que parte de los mismos corresponden al período t de aquellos del período t+1, para lo cual se requiere información detallada de estas transacciones (por moneda, por plazo, por actividad económica y sector institucional), que implica una mayor carga de consultas a los bancos comerciales.
• Los préstamos en mora podrían activarse, es decir, el prestatario en mora podría reanudar el pago correspondiente (interés y principal); y en caso que no pague, la deuda puede ser cubierta en su totalidad por las garantías (las garantías solicitadas por las sociedades monetarias permiten restaurar las pérdidas incurridas en caso que los préstamos no sean honrados).
 01/12/2005National Bank of MoldovaWe consider that the statements of External Debt Statistics Guide should be applied to the 1993 SNA while treating tradable and non-tradable loans. Thus we support traded loans to be reclassified into tradable securities and non-tradable securities to be reclassified into other financial instruments (e.g. loans). The reclassification should be reflected in other changes on assets and liabilities in international investment position.
Regarding loans and deposits we consider that SNA should maintain a distinction between them. Clear criteria of distinction between loans and deposits should be provided in international standards. In our opinion the External Debt Statistics Guide definition is most suitable.
 01/12/2005United KingdomWe agree with the AEG's decisions. However, we will want another chance to comment when the further work is complete and available for comment. We are concerned about the practicality of valuing non-performing loans in all cases. For example banks and similar institutions may be able to do so, but valuations of government loans may be more difficult to assess.
 30/11/2005Slovak RepublicSO SR agree with AEG recommendations.
 30/11/2005German BundesbankOn the valuation of loans, we would like to suggest clarifying the concept behind nominal value. If loan-loss provisions are intended to be included, one disadvantage might be that a too optimistic view is followed by overstating the actual amount of performing loans. This might prove counter-productive in the evaluation of the banking system's stability. Although external users might be able to derive loan figures adjusted for credit risk by using the new memorandum items, the risk of users misinterpreting or even ignoring these satellite data remains. Therefore, we would prefer to record the nominal value adjusted for credit risk. This approach would appropriately measure only the performing claims of the banking sector.
As for the definition of non-performing loans (NPLs), we would consider it very helpful to accommodate the situation of countries where such a concept of NPLs is not followed in the national legislation and, hence, where difficulties in adopting the definition of NPLs might arise. In light of the accepted alternative for the valuation of NPLs, some flexibility might be warranted here, too. Our proposal would be to amend the NPL definition as follows:
“Essentially a loan is non-performing when payments of interest and/or principal are past due by 90 days or more, or interest payments equal to 90 days or more have been capitalised, refinanced or delayed by agreement, or payments are less than 90 days overdue but there are other good reasons to doubt that payments will be made in full. If such a concept is not included in the national accounting legislation, an acceptable alternative would be to consider a loan as non-performing when there are good reasons to doubt that payments will be made in full.”
From our point of view two major advantages arise: Firstly, this amendment would accommodate the variety of the national accounting rules all over the world more appropriately since it offers countries without a 90-day criterion for NPLs a more flexible approach than before. Secondly, for the other group of countries no changes resulting from this amendment should be expected and they could continue relying on the 90-day criterion. One disadvantage might however be that the flexibility would lead to a less precise “cross-country-aggregate” of NPLs, but according to the current definition it could be that countries will stick with their national accounting rules and will not be able to offer any information about NPLs.
 30/11/2005Croatian National BankCroatian National Bank agree with the AEG recommendations.
 30/11/2005State Bank of VietnamWe agree with the recommendation that loans should be recorded at nominal value for both debtors and creditors introduced in mandatary memorandum items, which should be market equivalent values and interest arrears on loans.
 30/11/2005ItalyIstat fully agrees with the recommendations made at the July 2005 meeting of the Advisory Expert Group on National Accounts.
 29/11/2005TadjikistanМы согласны с предложением, учитывать эти ссуды по номинальной стоимости. На наш взгляд, в справочной статье следует показывать их эквивалентную рыночную стоимость (что ближе к правилам СНС для оценки активов), а не номинальную стоимость за вычетом ее ожидаемого снижения в результате трудностей с возвратом ссуды.
Безусловно, необходимы другие пояснения в части более ясного определения невозвращенных ссуд, последствий для исчисления УФПИК, распространения вышеупомянутого подхода на торговые кредиты и другие финансовые инструменты, а также гармонизация терминологии в различных макроэкономических статистических системах и пример отражения в счетах.
 29/11/2005LithuaniaWe agree with the recommendations of the memorandum items for non-performing loans.
 29/11/2005People's Bank of ChinaI agree with your improvements and have no other suggestions.
 25/11/2005VietnamWe agree with the recommendation that loans should be recorded at nominal value for both debtors and creditor introduced in mandatory memorandum items, which should be market equivalent values and interest arrears on loans.
 21/11/2005USAWe agree with the recommended treatment of the new memorandum items for non-performing loans.
 30/06/2005Slovak RepublicWe fully agree with AEG recommendations.
 30/06/2005MexicoWe agree with the recommendation that loans could continue to be recorded at nominal value for both creditors and debtors. However, in cases that have had important events into the balance sheet of the banks, is very useful to take into account the market value as first reference. That is because, in addition, it should add memorandum items as mandatory items for showing market value. At the same time, this requires more clarification in respect of the definition of which loans are non-performing and harmonization of terms used in the various manuals.
 30/06/2005Serbia and MontenegroWe agree with the recommendations made at the December 2004 meeting of the AEG.
 22/06/2005Bank of GhanaThe Advisory Expert Group on National Accounts (AEG) is of the view that loans should continue to be recorded at nominal value (as in the original provision), and that a memorandum item be used to show changes in their quality in terms of credit risk and other changes in market value. Their suggestion is however silent on the appropriate nature of memorandum item to apply - whether market equivalent value or nominal value less provision for impairment. This needs to be clarified. For example, if the memorandum item is to be based on nominal value less provision for impairment, then there deeds to be clear guidelines on the type of loans that could be categorised as non-performing and recorded appropriately. Thus the AEG needs to consider guidelines for loan classification and provisioning so as to maintain a consistent format for the memorandum item proposed. Clearly, this will entail further consultation since such a measure will have to be harmonised with other macroeconomic statistics provisions.
 03/06/2005Central Bank of VenezuelaWe agree with the valuation of loans at nominal value, and using memorandum items to show interest payment arrears and the realizable values for non-performing loans, although we realize that in practice it is difficult to obtain the realizable value, given the statistical limitations.
We recommend clarifying and standardizing the conditions that cause a loan to be classified as nonperforming, since these conditions tend to differ from country to country for transactions executed by financial institutions regulated by the Superintendency of Banks. The divergence is much greater for other residential institutional sectors of an economy.
 23/05/2005IsraelThe Thai question about treatment of interest on such loans has not been answered yet, and the AEG also asks for a number of clarifications on the issue. It seems urgent to solve these remaining problems.
Our office has performed a numerical exercise, and in a paper written by Pablo Mandler et al. a certain treatment of interest, which relates to some of these remaining problems, has been proposed. This proposal has been brought up in the past, and more explanations on the various aspects of the proposal have been added in later versions of the paper. According to the proposal the accrued interest at current prices receivable by the banks should be adjusted by deducting moving averages of the provision for non-performing loans made by the banks. The data examined for our country show that on average such provisions usually fit the actual debt defaults quite good, so that using moving averages of provisions is a suitable solution. We would, however, propose to check the actual data and revise the averages if needed.
We believe the proposal would give an answer to the Thai question, and in our view leads to an improved measurement of production, which would be consistent with production measures in other industries. The current treatment of non-performing loans leads to an excess valuation of prices for FISIM and does not reflect the actual prices received for the services. (The intermediation services for the non-performing loans have been provided, but are paid for by charging higher prices from other customers).
On the registration of the loans in the balance sheets, on the one hand data on total loans provided, whether paid back or not by the lenders, are needed for measuring the quantity changes of FISIM. On the other hand, by including non-performing loans in the balance sheets, the national accounts are providing a distorted picture of the effective value of these assets for the lending financial corporations. So the recommendation on adding a mandatory memorandum item is important. It is also important to register the memorandum item for creditors as well as for debtors – the financial institutions are able to supply the necessary information.
 20/05/2005German BundesbankThe AEG-decision to continue recording loans as nominal value in the accounts of creditors and debtors alike (option 2) clearly ensures symmetry in the national accounts. One disadvantage of this option might however be that bad loans provisions are not deducted from the overall loan portfolio in the main accounts but only proposed to be submitted as a new separate memorandum item. Insofar, the valuation of loans in the main sector accounts might follow a too optimistic view and overstate the actual amount of performing loans, which might be counter-productive in the evaluation of the banking system's stability. Although external users might be able to derive loan figures adjusted for credit risk by using the new memorandum items, the risk of users misinterpreting or even ignoring these satellite data remains. Furthermore, the national concepts of "bad loans" are expected to vary to a considerable degree.
We would therefore suggest investigating the merits of a new option 4(d), which would involve the valuation of loans at nominal value adjusted for credit risk for the creditor and the debtor. This approach would appropriately measure only the performing claims of the banking sector, while ensuring symmetry between creditor and debtor, too.
 19/05/2005Bank of IndonesiaBI has the same opinion to use nominal valuation of loans. Indonesia applies 5 classification of loans based on how the debtors can meet the schedule of the nominal and interest payment of loans. The 3 types called NPLs are the loans which are classified as 'sub-standard', 'doubtful', and 'loss'. The high NPLs in Indonesia will create problems when implementing FISIM.
 18/05/2005Bank of RussiaWe agree that the loan valuation in the SNA 93 doesn’t reflect the real financial position of the institutional units and its treatment needs renewing.
We consider that there must be a symmetry between data of the counterparties in any transaction and the legal obligations of the debtors should be shown in the accounts. For analytical purposes it’s appropriate to reflect the true position of the creditors in memorandum items which must be mandatory. Thus, we support the Option 2 as the form of presentation data on nonperfoming loans.
Taking into account the continued debate on the concept of market valuation of loans under IFRS this option of revision will provide the comparability of data and will allow to avoid inconsistency in data on loans.
The current SNA doesn’t contain any definition or criteria for decision of what loan should be classified as nonperforming. In our opinion the definition concerning loans and interest areas should be harmonized in the SNA and in the other international macroeconomic statistics manuals. We share the point of view that the definition of loans and interest areas should also be consistent with the banking supervision practice in order to use the same information resources for various purposes either for banking supervision or for compiling macroeconomic statistics.
We suggest that issues on application of accrual principles to debt arrears and on nonperforming loans should be considered simultaneously.
 18/05/2005Central Bank of ChileWe agree with continuing the recording as in the 1993 SNA, which does not recognize any transaction in the event of loan payment arrears.
With respect to the valuation of loans, we believe option 2 is appropriate, as it respects the symmetry required by the 1993 SNA in debtor and creditor recording. We also believe that valuation at nominal value reflects the legal obligation of the debtors. However, the memorandum items would make it possible to show the financial condition of the agents when debt payment arrears are significant.
An agreement must also be reached on the application of fair value as set forth in IAS 39, which would be the source of the data presented in the memorandum items.
IAS 39 is not currently applied in Chile, but this is the intention in some sectors. Microeconomic accounting should provide the background for such valuation to prevent the excess subjectivity to which such valuation could lead if each company interprets fair value and should thus make it possible to achieve internationally comparable figures.
In general, considering all the special treatments and definitions of financial transactions under review, not just in connection with this issue, it might be advisable to consider a satellite or supplementary system of financial accounts as an alternative to the memorandum items.
 16/05/2005Croatian National BankWe agree with the AEG recommendation to continue recording loans at nominal value for both debtors and creditors and to introduce mandatory memorandum items which shows the market equivalent values and interest arrears on loans (Option 2). We would like to see that your final proposal is fully harmonized with the MFS 2000.
 16/05/2005JordanDOS agree with the AEG recommendation to continue to be recorded at nominal value for both creditors and debtors. In addition, memorandum items should be added as mandatory items to be shown at market value; the System should add some paragraphs that clarify definitions of which loans are non-performing and specify the nature of the memorandum items
 16/05/2005Eastern Caribbean Central BankWe agree with the recommendation that loans should continue to be recorded at nominal value for both creditors and debtors and that a mandatory memorandum item presenting NPL at market values should be shown at least for governments and financial institutions as creditors. We also agree that more clarification is required in respect of the definition of which loans are non-performing and harmonization of terms used in the various manuals.
 13/05/2005Central Bank of HungaryIn the Magyar Nemzeti Bank we think that theoretically the best method for the valuation of loans would be the market valuation similarly to the debt securities. In theoretic point of view, we think that it is not useful to apply different method for valuation of loans and debt securities. In practical point of view, applying the nominal value is simpler but this would be true for debt securities too. In our opinion the change in the creditworthiness of the debtor should be reflected in the value of its debt regardless of the type of the debt. And similarly, change in the market interest rate should be reflected in the value of loans and debt securities in the same way. If there is need for loans at nominal value memorandum items could be applied to meet this need of the users but basically market valuation should be applied.
 13/05/2005State Bank of PakistanA clear definition of non-performing loans along with worked example of the accounts showing the memorandum items should be given in the manual.
 13/05/2005National Bank of KazakhstanWe support the recording of nonperforming loans on nominal value both for creditors and debitors with mandatory presenting NPL at market prices and NPL’s interest arrears in memorandum item. These should be mandatory for financial institution and government only. The nominal value less expected provisions for impairment can serve as market-equivalent value or market price.
 12/05/2005Czech National BankWe prefer to record the non-performing loans at nominal value for both creditor and debtors.
 12/05/2005European Central BankWe agree to keep the current valuation method for loans, i.e. nominal value, and to introduce a "mandatory" memorandum item for non-performing loans granted by financial corporations and general government. The additional efforts to reach more harmonisation in the definition and disclosure of non-performing loans are welcome, mainly on the precise nature of the memorandum item.
 12/05/2005Central Bank of NorwayOur principal opinion is that loans should be measured at market equivalent values, i.e. by nominal values net of specified loan loss provisions. However, we recognize the present practical obstacles and, thus, we support the statement given by Statistics Norway. The forthcoming implementation of IFRS may imply that the present situation and recommendations are temporary. We would also like to add that the concept "non-performing loan" is not clear and that what is discussed here is rather the treatment of specified loan loss provisions.
 11/05/2005IndiaIndia agrees with the decisions of the AEG to record loans at nominal values and to show their market values as memorandum items.
 10/05/2005USAThe U.S. Bureau of Economic Analysis endorses the recommendations made by the AEG.
 10/05/2005National Bank of MoldovaWe agree that nonperforming loans should be recorded for both debtor and creditor at nominal value and their market value should be shown as memorandum item. This treatment will be consistent with International Investment Position and External Debt statistics concepts. We also suggest putting in memorandum items only those positions that are considered essential.
A clear definition of nonperforming loans is strongly demanded.
 09/05/2005AustraliaAustralia was disappointed with the decision of the AEG. While we appreciate the difficulties of market valuation for debtors, in our view the retention of nominal valuation of loans is contrary to the fundamental concept of market valuation which is fundamental to the SNA. Nominal valuation sends a misleading message about the economic health of institutional sectors and economies. While a compulsory memorandum item recording market valuation will help in this regard, it is only a partial solution as it would only be provided for financial institutions and governments as creditors and there is no compulsion to provide information for counterparties.
We support the need for further work to clarify the definition of non-performing loans and how the market valuation is to be calculated.
 09/05/2005MaldivesWe wish to agree with the AEG that the loan will continue to be recorded at the nominal value and agree that the definition, implication to measurement of FISIM be made clear and consistent with treatment with other manuals.
 09/05/2005United KingdomWe endorse the decision that loans should continue to be recorded at nominal value for both creditors and debtors, until there is a consistent method for both creditors and debtors to estimate a market value. That, in addition, memorandum items should be shown at market value. And, that these should be mandatory for at least financial institutions and government as creditors. We also agree that more clarification is required in respect of:
i. The definition of which loans are non-performing;
ii. The exact nature of the memorandum items (whether market-equivalent value or nominal value less expected provisions for impairment);
iii. A worked example of the accounts showing the memorandum items;
iv. Harmonization of terms used in various manuals;
v. The implications for the recording of FISIM; and
vi. Whether similar treatment should be extended to other financial instruments (in particular trade credits).
 09/05/2005Central Bank of IranWe agree with the AEG recommendation that loans, including non-performing loans should continue to be recorded at nominal value for both creditors and debtors. In our view recording the market-equivalent value of loans and interest arrears on loans as memorandum items may be difficult due to the lack of data, so it shouldn’t be mandatory. We would like to have more clarification about calculating of FISIM in this regard.
 09/05/2005ItalyWe agree with the recommendations of the AEG but the decision depends also on the contribution of other institutions like the Bank of Italy.
 06/05/2005TurkeyWe agree with the recommendations made by the Advisory Expert Group on National Accounts at its second meeting in December 2004.
 06/05/2005Commonwealth of Independent States We agree with suggestion to record these loans at nominal value. In our view, the memorandum item should show their market-equivalent value (which is closer to SNA rules for valuation of assets) rather than their nominal value less expected provisions for impairment.
Other clarifications in respect of clear definition of non-performing loans, implications for FISIM, whether similar treatment should be extended to trade credits and other financial instruments are definitely needed as well as harmonization of terms in various macroeconomic statistical systems and an example of accounts.
 06/05/2005Macao, SAR ChinaWe agree with the recommendations.
 05/05/2005SwedenSweden agree with the AEG recommendation of December 2004 and, as noted by the AEG, emphasize more clarification in the suggestions.
 04/05/2005DenmarkThe AEG recommendation can be accepted with the exception of the mandatory memorandum item. Though the usefulness of memorandum items for analytical purposes is acknowledged, voluntary memorandum items are preferred.
 29/04/2005NorwayRegarding the issue of non-performing loans, Statistics Norway agrees with the recommendation from the AEG. There is however arguments for implementing market valuations of loans in the system (option 4 in the discussion paper). Since there are many unsolved problems e.g. how should a 'market-equivalent' value be quantified (fair value, value adjusted for credit risk, market value), we find it reasonable go gain experience before introducing new recommendations of valuations of loans. We therefore agree with the recommendations that loans should continue to be recorded at nominal value for both creditors and debtors, and that memorandum items should be shown in market value. Like the AEG, we emphasize the need for further clarifications.
 29/04/2005Central Bank of ColombiaEl Banco de la República de Colombia considera que la inclusión de “memorandum ítems”para los préstamos a valor de mercado es útil para el análisis de las estadísticas de deuda externa. No obstante, en el caso colombiano la no existencia de un mercado secundario formal para este tipo de instrumentos, dificulta la construcción de este indicador.
Adicionalmente, sería muy útil definir de una manera más precisa el criterio para determinar si un préstamo se encuentra en mora.
 28/04/2005Trinidad and TobagoWe agree with the recommendations of the AEG.
 25/04/2005Bank of Sierra LeoneWith reference to the above subject we agree with the recommendations of the Expert Group on National Accounts (AEG) especially where there is harmonization of definitions and other concepts between the Balance of Payments (BOP) and system of National Accounts (SNA).
 19/04/2005SingaporeWe agree with the recommendation to continue recording loans at nominal value for both creditors and debtors, and show in memorandum items the market-equivalent value and interest arrears on loans. This retains symmetry between debtors and creditors while reflecting the true financial position of the creditors.
While noting the importance for common terminology to be adopted across the manuals, we suggest to allow for flexibility to cater for country-specific circumstances - variations in national definitions concerning loans and interest accrual provided that sufficient explanation and/or information is provided to help users interpret the statistics correctly.
 14/04/2005Bank of FranceLa solution retenue, à savoir le maintien dans les comptes financiers d’un enregistrement en valeur nominale brute, permet de respecter le principe de symétrie. Cela étant, des investigations complémentaires sont nécessaires pour aboutir à une définition harmonisée des prêts improductifs et de leur mode de valorisation, pour l’enregistrement dans les données complémentaires obligatoires.
 13/04/2005Bank of Korea We agree with the AEG in respect that its recommendation can keep the basic framework of the 1993 SNA unchanged and furnish more accurate and plentiful information about loans. In addition, to fulfill the SNA`s general principle of market valuation, it is necessary that we shall try to evaluate loans as market prices in the long run.
We need to discuss the treatment of loans considering the application of accrual principle of debt arrears together.
 12/04/2005GreeceWe agree with the recommendations of the AEG on the issues for which a decision has been taken, at the December 2004 meeting of the group.
 12/04/2005Central Bank of HondurasLa inquietud por la forma en que las estadísticas macroeconómicas incorporan los préstamos improductivos, morosos o “créditos malos”, surge particularmente por los grandes problemas financieras de los años noventa. La recomendación de continuar valorando los préstamos a su valor nominal, pero utilizando secciones de memorando para mostrar otra información secundaria que permita la observancia del comportamiento en el pago de intereses sobre préstamos en mora es más amplia.
 11/04/2005The NetherlandsWe agree with the recommendations made at the December 2004 meeting of the Advisory Expert Group on National Accounts.
 11/04/2005Central Bank of KuwaitKuwait agreed that loans should be recorded at nominal value for both creditors and debtors. Memorandum items should be shown at market value for at least financial institutions and government as creditors.
 11/04/2005Bank of Tanzania/National Bureau of StatisticsWe recommend that non-performing loans should be treated as debt arrears.
 11/04/2005Hong Kong, ChinaWe agree with the AEG recommendation that loans, including non-performing loans, should continue to be recorded at nominal value for both creditors and debtors.
We also concur with the AEG suggestion of including, as memorandum items, loans at market value but would like to seek clarification as regards the implication on the allocation of financial intermediation services indirectly measured (FISIM) and calculation of interest income. Practical difficulties are also envisaged for some financial institutions in reporting data on market value of loans.
 11/04/2005MalawiI fully endorse the recommendations of the Expert Group on National Accounts.
 11/04/2005Central Bank of The NetherlandsFirst of all, we want to express our support for the AEG`s decision that loans should continue to be recorded at nominal value for both creditors and debtors, while at the same time exploring the possibilities of collecting data at market value. This is in agreement with the opinion of the BOP Committee. The same view is held by the ECB`s Statistics Committee. The arguments, maintaining symmetry between the valuation of loans by debtors and creditors and the need for stronger analytical data, are clear. Nominal valuation of loans in the core accounts has the additional advantage that it ensures a link with monetary and financial statistics.
We do, however, want to put the decision to require memorandum items at market value into a wider perspective. A proliferation of memorandum items can easily overburden data collection. Therefore, we recommend that the AEG, before concluding its deliberations, reconsiders all the memorandum items put forward and selects only those that are considered essential. Non-essential memorandum items could then be made supplementary items. On a more technical note, notwithstanding the analytical use of data at market value, we want to reiterate the considerations put forward in the electronic discussion group regarding the feasibility of collecting these data. This will in large part be determined by the developments regarding IAS. As we understand IAS-39, it does not establish a common method for debtors and creditors, since assets are subject to impairment tests and liabilities are not. Moreover, IAS will not be obligatory for all companies and is prescribed for different groups of companies for different countries. More experience is probably needed before any useful data can be produced.
 11/04/2005Philippines - It supports the recommendation that non-performing loans should continue to be recorded for the debtor and the creditor. However, it should qualify the definition of a non-performing asset and should specify at what value they will be recorded.
-There should also be a clear guideline as to how many years non-performing loans should be carried in the national accounts. Once these non-performing loans can no longer be collected, can these be written off from the accounts? Specific examples of the use of memorandum items should be cited. What about the accumulated unpaid interest payments of these non-performing loans? In the case of the Philippines, some of these were capitalized or added to the principal loan value. Is this the correct way of dealing with accrued interest on non-performing loans?
 11/04/2005Russian FederationWe agree with the recommendations made by the AEG on National Accounts.
 11/04/2005South African Reserve Bank We agree with the recommendations but would like to have the treatment of interest payments and the implications for FISIM clearly ironed out.
 11/04/2005South AfricaSouth Africa agrees in principle to the recommendations but would like to see harmonization of the treatment with the manual of statistics for money and banking.
 18/03/2005Palestinian Central Bureau of StatisticsThe PCBS agrees with the committee in the way to treat the non performing loans, as non performing loans should be treated as debt arrears.
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