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Press release of Banco de Portugal on the eligibility criteria for additional credit claims as collateral in Eurosystem credit operations

At its meeting on 8 December 2011, the Governing Council of the ECB decided to adopt (decision ECB/2011/25) additional temporary measures relating to Eurosystem refinancing operations and eligibility of collateral, and established that national central banks (NCBs) may accept as collateral for Eurosystem monetary policy operations additional credit claims that satisfy specific eligibility criteria. According to the same decision, the NCBs shall establish the new eligibility criteria and the appropriate risk control measures, which shall be subject to prior approval by NCBs and the Governing Council of the ECB.

In this vein, at its meeting on 9 February 2012, the Governing Council of the ECB decided to approve the following temporary measures proposed by Banco de Portugal, which will widen the scope of credit claims to be accepted as collateral in Eurosystem credit operations:

a. To accept individual credit claims with a probability of default not exceeding 1.5%, which shall be subject to more demanding risk control measures than those currently in force.

b. To extend the acceptance of the COFACE Rating Tool as a tool to evaluate the credit quality of debtors belonging to Service, Trade and Other activity sectors.

c. To accept homogeneous portfolios of credit claims relating to:

i. Mortgage-backed loans to households;

ii. Consumer credit to households; and

iii. Loans to enterprises other than financial corporations.

Credit claim portfolios shall not be subject to minimum credit quality requirements, but shall be subject to specific and strict risk control measures.

Individual additional credit claims shall be reported to Banco de Portugal, according to the same operational procedures used for claims accepted within the scope of the general framework of collateral described in the Annex to Instruction No 1/99 on credit claims.

The operational procedures regarding the mobilisation of credit claim portfolios shall be the object of a specific framework that will be established in an Instruction to be published by Banco de Portugal..

All detailed technical documentation will be published on BPnet portal, in the ‘Money Market’ section, under ‘EEB’.

In addition, Banco de Portugal has decided to introduce a number of changes in the general framework on credit claims, that aim to simplify the mobilisation of credit claims and which will be reflected in Instruction of Banco de Portugal No 1/99.

Thus, regarding individual credit claims accepted under Instruction No 1/99, Banco de Portugal has decided to:

a. Reduce the minimum amount of credit claims accepted as collateral from €500,000 to €100,000.

b. Allow for the simplification of the ex ante procedures regarding the authorisation to use credit claims.
In those situations the participating institution shall inform Banco de Portugal, in writing and before the start of credit claims mobilisation, about the internal procedures implemented to communicate the information on credit claims to be mobilised, guaranteeing that all requirements are complied with. The external auditors report shall be submitted to Banco de Portugal within the maximum period of one year after the start of the mobilisation of credit claims as collateral.

c. Change the process for sending credit claims information, which will be made through BPnet’s File Transfer service (file upload).

d. Adjust the set of information that must be reported on credit claims, changing some mandatory variables into optional, according to the new data scheme, to be made available on BPnet portal.

e. Adjust the codes of some variables to be reported. The new code list will be available on BPnet portal.

The measures disclosed in this press release will be published in February in an Instruction of Banco de Portugal.

Lisbon, 9 February 2012