Customers asking the bank to renegotiate their mortgage in order to mitigate the impact of a sudden increase in installments, they will be “marked” as higher risk customers if, in the case analysis process, the bank determines that this renegotiation is due to “financial difficulties”. European law obliges banks to always be alert to signs of deterioration in the financial capacity of customers and, if there is a renegotiation on this basis, such recognition penalizes institutions’ capital – which it will not be “forgotten” later, in case you need new credit in the future. AND even in other institutions the brand will remain, “because other banks are not stupid”a banker tells the Observer.
The Bank of Portugal came a few days ago to clarify this there is no “special marking” customers starting credit renegotiation procedures under new legislation introduced by the government in November. But this is one reference only to any marking in the Credit Responsibility Center (CRC), the platform managed by Banco de Portugal that all banks (and people themselves) can consult to find out information about the credit that each one has. However, when it comes to “marking”, the story doesn’t end there.
As the Bank of Portugal itself acknowledges, credit renegotiations carried out under the new legislation will be incorporated into the default risk action plan (PARI), regime created precisely to prevent situations of financial difficulty from turning into cases of bankruptcy. For this reason, as the legislation for people in financial difficulties (and potentially at risk of bankruptcy) is at stake, bankers such as Paulo Macedo, president of Caixa Geral de Depósitos, said in November that all credits are being renegotiated under this regime will be considered credits to stage 2.
This classification is linked to the way banks calculate the risk of the loans they grant to customers and it is also important to calculate impairment levels (forecasts) and regulatory capital ratios which banks must comply with. In the rules of the European Banking Authority (EBA, in the Anglo-Saxon acronym), a credit is stage 1 means that no deterioration of the debtor’s financial situation is detected, stage 2 indicates some impairment of ability to pay and stage 3 refers to an already completed default or restructuring.
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