Circular Letter No. CC/2026/00000001

Circular Letter No. CC/2026/00000001
Mod. 40000375/T – 01/14
Subject: implements Guideline 2025/2595 of the European Central Bank of 10 December, on the supervisory approach of national competent authorities for the coverage of non-performing exposures held by less significant supervised entities

1. Through Circular Letter No. CC/2024/00000049 (CC/2024/00000049) of 28 November 2024, the Bank of Portugal communicated to less significant credit institutions its supervisory approach regarding the coverage of non-performing exposures (NPEs) held by less significant credit institutions, when originated before 26 April 2019.

2. On 19 December 2025, the European Central Bank (ECB) published Guideline 2025/25951 on the supervisory approach of National Competent Authorities (NCAs) on this matter, which is globally aligned with the provisions in CC/2024/00000049 (hereinafter "Guideline").

3. Considering the importance of less significant credit institutions ensuring, in a timely manner, a regular and prudent increase in NPE coverage and consequent reduction of prudential exposure to these assets, as well as strengthening their resilience to adverse macroeconomic developments and potential deterioration in credit quality, the Bank of Portugal informs that it maintains the expectations transmitted in CC/2024/00000049, including the transition period for full application of coverage levels on 31 December 2027.

4. The Bank of Portugal further informs that, as provided for in Article 3(3) and Article 7 of the Guideline, it will annually inform less significant credit institutions that will be subject to information reporting and assessment by the Bank of Portugal regarding compliance with the expectations of CC/2024/00000049 (including reporting deadlines and models). The first reference date for reporting by institutions and assessment by the Bank of Portugal will be 31 December 2025, as provided for in CC/2024/00000049.

1 Guideline (EU) 2025/2595 of the European Central Bank of 10 December 2025 on the supervisory approach of national competent authorities for the coverage of non-performing exposures held by less significant supervised entities (ECB/2025/40)