Instruction No. 2011-I-07 relative to the publication by land credit companies and housing finance companies of information regarding the quality of financed assets

Prudential Control Authority

The Prudential Control Authority,

Having regard to the Monetary and Financial Code, in particular Articles L. 515-13 to L. 515-39 as well as L. 612-24 and R. 515-2 to R. 515-17;

Having regard to Regulation No. 99-10 of July 9, 1999, as amended, of the Banking and Financial Regulations Committee regarding land credit companies and housing finance companies;

Having regard to Instruction No. 2000-04 of April 19, 2000, regarding the publication by land credit companies of information relating to the quality of their assets, as amended by Instruction No. 2008-06;

Having regard to the opinion of the Prudential Affairs Consultative Committee dated May 26, 2011;

Decides:

Article 1

Pursuant to Article 13 of Regulation No. 99-10 of the Banking and Financial Regulations Committee regarding land credit companies and housing finance companies, land credit companies and housing finance companies shall send to the Prudential Control Authority a report containing information relating to the quality of financed assets recorded on the balance sheet or received as collateral pursuant to Articles L. 211-36 to 211-40, Articles L. 313-23 to L. 313-35, and Articles L. 313-42 to L. 313-49 of the Monetary and Financial Code, excluding replacement values. This report shall include the following points, established based on data available at the close of the fiscal year:

I - Secured Loans

1. Breakdown of secured loan balances, within the meaning of Articles L. 515-14, L. 515-16, and L. 515-16-1 of the Monetary and Financial Code, by claim category, by counterparty type, and by guarantee type according to the indications in the Annex. The balance of each claim category must be distributed according to the type of counterparty. For each type of counterparty within each claim category, balances are distributed according to the type of guarantee or, where applicable, the combination of guarantee types. Furthermore, for each claim category, the gross amount of unpaid claims, doubtful claims, and provisions allocated to them shall be specified.

2. Breakdown of balances of loans secured by a mortgage on residential real estate, balances of loans secured by a mortgage on professional real estate, and balances of loans secured by a guarantee issued by a credit institution or an insurance company, according to their eligible ratio for refinancing through privileged resources, which may be either the outstanding principal at the close of the fiscal year or the product of the ratio defined in Article R. 515-2 of the Monetary and Financial Code and the value of the property given as collateral for loans secured by a mortgage, or the value of the financed property for loans secured by a guarantee, re-examined in accordance with Article 3 of Regulation No. 99-10 of the Banking and Financial Regulations Committee regarding land credit companies and housing finance companies.

3. Breakdown of the balances of the three loan categories mentioned in 2 above according to the year the loan contract was concluded. For each year, the number of loans concerned shall be specified.

4. Breakdown of the balances of the three loan categories mentioned in 2 above according to their remaining term, rounded to the nearest whole number of years. For each term, the number of loans concerned shall be specified.

5. Breakdown of the balances of the three loan categories mentioned in 2 above according to the location of the properties provided as collateral by country.

6. Breakdown of balances of guaranteed loans according to the weighting attributed to them under the ratio for covering privileged resources with financed assets mentioned in Article R. 515-7-2 of the Monetary and Financial Code and defined by Regulation No. 99-10 of the Banking and Financial Regulations Committee regarding land credit companies and housing finance companies, with, where applicable for housing finance companies, a distinction according to whether the guarantee entity is or is not included in the consolidation scope within the meaning of Article L. 233-16 of the Commercial Code.

7. Breakdown of balances of loans mobilized by promissory notes governed by Articles L. 313-42 to L. 313-49 of the Monetary and Financial Code according to the criteria mentioned in 1) to 5).

II - Exposure to Public Entities

Breakdown of balances of direct exposures to public entities, on the one hand, and exposures guaranteed by them, on the other hand, by country, according to the nature of the public entity (State public administrations, others), the nature of the exposure when the latter relates to a partnership contract or a contract mentioned in the first paragraph of Article 6148-5 of the Public Health Code, and its rating established by an external credit rating agency recognized by the Prudential Control Authority in accordance with Article L. 515-44 of the Monetary and Financial Code, when such rating is necessary. For these claims, the gross amount of unpaid claims, doubtful claims, and provisions allocated to them shall be specified.

Breakdown of exposure balances according to their remaining term, rounded to the nearest whole number of years. For each term, the number of exposures concerned shall be specified.

III - Securitization Vehicles and Similar Entities

Names of securitization vehicles and similar entities in which the institution holds shares, stock, or debt securities, nature of the claims composing the assets of the securitization vehicle (claims secured by mortgages on residential real estate, claims secured by mortgages for professional use, guaranteed claims, claims granted to or guaranteed by one or more public entities), as well as, where applicable, the name of the shares or stock held, the rating assigned by an external credit rating agency recognized by the Prudential Control Authority in accordance with Article L. 515-44 of the Monetary and Financial Code, specifying whether the originators of the securitized exposures are or are not integrated into the consolidation scope to which the land credit company or housing finance company belongs, the date on which the securitized exposure was acquired or financed by the land credit company or housing finance company, as well as the number and nominal value of each of them.

Breakdown of shares or stock of securitization vehicles and similar entities according to their remaining term, rounded to the nearest whole number of years. For each term, the number of exposures concerned shall be specified.

IV - Replacement Values

Breakdown by nature of values and remaining term:

• securities, values, and deposits owed by credit institutions or investment firms benefiting from the highest credit quality rating established by an external credit rating agency recognized by the Prudential Control Authority pursuant to the provisions of Article L. 511-44 of the Monetary and Financial Code or guaranteed by credit institutions or investment firms of the same credit quality rating; breakdown by remaining term;
• claims with a remaining term of less than 100 days on credit institutions or investment firms established in a Member State of the European Community or a party to the Agreement on the European Economic Area when they benefit from the second-best credit quality rating established by an external credit rating agency recognized by the Prudential Control Authority pursuant to the provisions of Article L. 511-44 of the Monetary and Financial Code or guaranteed by credit institutions or investment firms of the same credit quality rating;
• for housing finance companies, debt securities issued or fully guaranteed by one of the public entities mentioned in 1 to 5 of Article L. 515-15 I of the Monetary and Financial Code; breakdown by remaining term.

Amount of securities, sums, and values received as collateral for hedging operations mentioned in Article L. 515-18 of the Monetary and Financial Code (not taken into account in the limit defined in Article R. 515-7).

V - Early Repayments

Amount and proportion expressed as a percentage of early repayments recorded during the fiscal year by claim category, reported to the arithmetic mean of daily balances, or the mean of end-of-month balances. The choice of one or the other indicator must be specified. When the refinanced assets are received as collateral pursuant to Articles L. 211-36 to 211-40, Articles L. 313-23 to L. 313-35, and Articles L. 313-42 to L. 313-49 of the Monetary and Financial Code, only the early repayment rate calculated on the pool of mobilizable loans is published.

VI - Interest Rate Risk

Information on the level and sensitivity of the interest rate position, calculated as of December 31 of the previous fiscal year. Indications will also be provided on the methodology for measuring the interest rate position and on the hedging policy.

VII - Liquidity Need Coverage

Information on the liquidity need over 180 days and the methods of coverage calculated as of December 31 of the previous fiscal year.

Article 2

This report is prepared once a year and transmitted to the Prudential Control Authority no later than June 10, dated and signed by one of the responsible executives or by persons regularly accredited with the General Secretariat of the Prudential Control Authority.

Article 3

Pursuant to Article 13 bis of Regulation No. 99-10 of the Banking and Financial Regulations Committee, land credit companies and housing finance companies shall publish, within forty-five days following the end of each quarter, in the Bulletin of Mandatory Legal Announcements, in any newspaper authorized to receive legal announcements, or by any other means, the information relating to the quality and duration of their financed assets as specified in Article 1 of this Instruction and established based on data available as of March 31, June 30, September 30, and December 31 of each year. This information is also filed with the Prudential Control Authority.

Article 4

Instruction No. 2000-04 of April 19, 2000, regarding the publication by land credit companies of information relating to the quality of their assets, as amended by Instruction No. 2008-06, is repealed.

Article 5

This Instruction enters into force immediately.

Paris, June 15, 2011

The President of the Prudential Control Authority [Christian NOYER]

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Annex

Categories of Secured Loans

The categories of guaranteed claims are as follows:

• commercial claims;
• export credits;
• cash credits;
• equipment credits;
• housing investor credits;
• developer credits;
• other credits.

The types of counterparties are as follows:

• non-financial companies and individual entrepreneurs;
• individuals;
• others.

The types of guarantees are as follows:

• mortgage guarantees on residential real estate;
• mortgage guarantees on professional real estate;
• guarantee issued by a credit institution;
• guarantee issued by an insurance company;
• guarantee of the Social Accession to Property Guarantee Fund.

Professional real estate includes all buildings that are not for residential use.