processes facilitate the timely and effective management of problem loans, thereby reducing their negative effects. the proper classification of loans is also essential for the correct representation of the banks ’ situation to stakeholders including external investors and market analysts. it is desirable therefore that banks adopt and apply common prudential principles. in this context, the guidance focuses on clarifying further npl classification issues which have been identified during ongoing supervisory work, for example triggers for ‘ unlikely to pay ’, ‘ days past due ’ counting, and links to forbearance. the ecb does not have explicit accounting powers. moreover, existing standards do not contain specific rules regarding the modalities of write - offs. some supervisors have issued npl write - off guidelines with a view to promoting timelier npl disposal and, more generally, the development of a market for distressed debt. they are – with few exceptions – principles - based, in accordance with the recovery expectations. the guidance is that when loans are deemed uncollectable or unrecoverable, they should be written off in a timely manner. the guidance also addresses qualitative aspects with regard to approaches to assessing 4 / 6 bis central bankers'speeches provisions on an individual and collective basis. furthermore, it puts emphasis on the quality of internal documentation, reporting and disclosures for the processes surrounding this. the use of robust and accurate collateral valuation methods is essential for the proper valuation of npls and for their effective management. it also contributes to the promotion of an active npl market by reducing uncertainty relating to asset values. moreover, a conservative approach to the valuation of collateral ensures that the npls are adequately provisioned, is a key element for the soundness of institutions. in most ( in - scope ) member states, specific rules govern collateral valuation for the financial sector, especially for real estate collateral. typically, these rules are related to professional requirements, but in some cases other specific rules have been drafted pertaining to, for example, appraiser independence, performance and limits on institutions ’ reliance on individual appraisers. in some cases, appraisers are also subject to the supervision of banking or financial market authorities. in this context, the guidance addresses qualitative aspects with regard to governance and procedures linked to valuing collateral, the frequency of valuation updates for npls as well as use of market values plus adequate discounts ( e. g. for liquidation costs ). the valuation of foreclosed assets is also covered. banks

patrick honohan : financial sector developments and architecture in ireland – a constantly changing landscape address by mr patrick honohan, governor of the central bank of ireland, at the launch of the book “ bank architecture in dublin – a history to c 1940 ” by dr michael o ’ neill, dublin, 7 february 2012. * * * bank buildings in the 19th and 20th centuries were everywhere designed to project confidence. as michael o ’ neill observes in this delightful book, the grand bank buildings which represent such an important component of victorian dublin were establishments “ built as statements of intent... like churches, they suggest permanence, stability, longevity ”. it is easy of course to make the contrast between the solid designs and structures of the older buildings with the more recent business models of their occupants. we all know which has proven more firm and has stood the test of time better. consider the austere approach of the bank of ireland – the central bank of its day – in its early years in the 1800s. apparently there were problems of punctuality, even among the directors. according to another classic irish book on banking in the past, f. g. hall ’ s 1949 history of that bank ( cited by michael not least for its nice architectural chapter on the parliament house across from us here in foster place ), the directors were fined 1s 1d for being 15 minutes late for a meeting ; the governor was fined 2s 8½d. the fine increased with the degree of lateness. and, in contrast to the trusting ways of latterday bankers, each director was required to deposit 5 guineas in advance from which the fines would be deducted. i wonder how many here can guess why such an odd amount as 2s 8½d? ( almost certainly it reflects the exchange rate of the time : 13 irish pence equalled 12 english pence, so an english half - crown would meet the fine ). it ’ s easy to be nostalgic about the past but in reality, whatever about the buildings they occupied, financial institutions were probably no more popular then than they are now. victorian banks were conservative and mostly profitable. they generally charged more for borrowing in ireland than the british banks, and seem to have upped the spread shortly after independence, just to be on the safe side, i suppose. over time they tended to collect more by way of deposits than they used in lending. the surplus was placed in the london money market. times have changed