The European Banking Authority (EBA) published its final Report amending the Guidelines on the application of the definition of default. The Report introduces targeted amendments to better reflect specific aspects of non‑recourse factoring. It also confirms that the 1% threshold applied to reductions in net present value loss (NPV threshold) in debt restructuring remains appropriate for prudential default recognition.

The EBA has introduced targeted amendments to address specific technical aspects of the past-due treatment of non-recourse factoring. In particular, the specific technical past-due treatment at the individual invoice level has been extended from 30 to 90 days. This change better reflects the operational features of invoice-based receivables and reduces the risk of incorrect default classifications. The Guidelines have also been updated to align with the amendments introduced by the Capital Requirements Regulation (CRR 3).

At the same time, the current NPV threshold framework is sufficiently flexible, risk-sensitive and consistent with the accounting framework. It does not lead to default misclassifications, as it applies only to borrowers experiencing financial difficulties, and to restructurings resulting in losses. In addition, it is aligned with other thresholds used for default identification, ensuring a simple and efficient framework.