Provision Funds - Balances and Coverage Ratios (AC)

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So, if I'm getting this right, the amount left is to cover defaults after June 1st, because anything before May 31st would have been ring-fenced?

Thanks but is that correct based on 1 May onwards?

“Ring-fencing” in the Provision Funds relating to the Access Accounts

The Assetz Capital Access Accounts prioritise liquidity and consistency of interest payments and seek to
avoid, where possible, situations where lenders are unable to withdraw their funds in normal market
conditions. For this reason, all loans remain tradeable within the Access Accounts and all Access Account
users participate equally in every loan held within the relevant account. This means that lenders will own
parts of loans which may be in difficulty or even in default.
To treat lenders fairly and to avoid situations where a lender might join a loan which may already be facing a
loss, the discretionary decision for Access Account loans is taken immediately once:

• The loan defaults, or;

• Assetz Capital considers that the borrower is unlikely to pay its obligations under the P2P agreement
in full, without the firm enforcing any relevant security interest or taking other steps with analogous
effect, or;

• The loan is subject to a Monitoring Event and/or a capital value discount has been disclosed on the
loan record.

In relation to the first two categories, if there is sufficient money within the relevant Provision Fund to fully
cover the assessment of the Loss Given Default (“LGD”) on such a loan the discretionary decision to cover
that loss is taken immediately and the LGD amount is “ring-fenced” (i.e.: set aside specifically to cover any
actual loss arising from that loan). In relation to loans in the third category, if there is sufficient money within
the relevant Provision Fund to cover the assessment of the higher of the Expected Loss (“EL”) or the capital
value discount disclosed on such a loan, the discretionary decision is taken immediately and the relevant
amount is ring-fenced.

“Ring-fenced” amounts are not included in the available funds for the Provision Funds as they are no longer
available, having been allocated against the loan in question. Should the loan recover and become a fully
performing loan again (perhaps because the borrower corrects the issues which caused the loan to default
or to be monitored) the “ring-fenced” funds can be released and become available funds within the Provision
Fund once more.

If there is not sufficient money within the relevant Provision Fund to fully cover the assessment of the Loss
Given Default or Expected Loss/capital value discount then the loan will not be allowed to trade within the
Access Accounts, thereby preventing lenders from gaining or increasing a holding in a loan which is in
difficulty and which may ultimately face a loss.

Updated figures

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