Unlikeliness to pay (UTP) - exit from NP status

According to paragraph 148 of Section 7.2 “Indication of unlikeliness to pay” of the EBA Guidelines on management of non-performing and forborne exposures , credit institutions should recognise exposures as unlikely to pay and identify indications of unlikeliness to pay in accordance with section 5 (“Indications of unlikeliness to pay”, paragraphs 35-65) of the EBA Guidelines on the application of the definition of default . The non-delivery of the required documentation thus may be assessed e.g. as breaching the covenants of a credit contract and/or justified concerns about a borrower’s future ability to generate stable and sufficient cash flows. In addition, according to paragraph 149 of the Guidelines on management of non-performing and forborne exposures, the non-provision or the unreasonably late provision of information may be seen as a negative sign with regard to the borrower’s creditworthiness. Once a borrower or an exposure is classified as non-performing, then, according to paragraph 157 of section 7.3.3 “Cure/exit from non-performing status”, credit institutions should apply the exit criteria from non-performing status that are specified in Annex V to Commission Implementing Regulation (EU) No 680/2014 and in Article 47a(6) of Regulation (EU) No 575/2013 as amended by Regulation (EU) 2019/876 (CRR2). Following these provisions, provided that a credit institution assesses the existence of unlikeliness to pay, the forborne exposure shall be classified as non-performing forborne and shall cease to be classified as non-performing when (among others conditions) a cure period of at least one year has passed since the later of (i) the moment when the forbearance measures were applied; and (ii)  the moment where the exposure has been classified as non-performing.