...No Universal Definition: Fitch Ratings strongly believes that clearer and more comparable disclosure of asset quality numbers is important for bank analysis. Problem loans have a direct and material impact on a banks results, regulatory capital reporting and market valuation. There has to date been no universal and internationally binding definition of a problem loan in the EU, which in Fitchs opinion, weakens market discipline through inconsistent asset quality reporting. However, the EU is making positive strides this year. Heterogeneous Problem Loan Definition: EU banks built their problem loan definitions on two common sources: International Financial Reporting Standards (IFRS) and bank regulatory requirements (most recently Capital Requirements Regulation (EU) 575/2013 (CRR)). Both of which have left considerable scope for individual and national interpretation. EBA Introducing Harmonised Definition: The European Banking Authoritys (EBA) comprehensive definition of problem loans (announced...
