CA-5.8.64
The elements to be taken as indications of unlikeliness to pay include:
(a) The bank puts the credit obligation on non-accrued status;
(b) The bank makes a charge-off or account-specific provision resulting from a significant perceived decline in credit quality subsequent to the bank taking on the exposure;51
(c) The bank sells the credit obligation at a material credit-related economic loss;
(d) The bank consents to a distressed restructuring of the credit obligation where this is likely to result in a diminished financial obligation caused by the material forgiveness, or postponement, of principal, interest or (where relevant) fees;52
(e) The bank has filed for the obligor's bankruptcy or a similar order in respect of the obligor's credit obligation to the banking group; and
(f) The obligor has sought or has been placed in bankruptcy or similar protection where this would avoid or delay repayment of the credit obligation to the banking group.
51Specific provisions on equity exposures set aside for price risk do not signal default.
52Including, in the case of equity holdings assessed under a PD/LGD approach, such distressed restructuring of the equity itself.
Amended: April 2011
Apr 08
Apr 08