EIR Engine

The EIR Engine is an IT solution developed by EY for calculating EIR and catch-up adjustments, as well as recalculating EIR. It can also provide Credit Adjusted EIR (CA-EIR) for assets Purchased or Originated as Credit Impaired (POCI) in line with specific IFRS 9 requirements for POCI assets.

What EY can do for you

The key feature of the EIR Engine is the flexible adoption of bank-specific triggers indicating whether EIR should be re-calculated or if a catch-up adjustment should be booked, and the definition of hierarchy for cases where multiple triggers emerge at the same time.

EIR Engine key functionalities:

  • EIR calculation and re-calculation
  • Modification gains/losses calculation
  • Trigger event identification based on a customizable set of criteria
  • Prioritization of trigger events enabling a layered approach to EIR re-calculation
  • Fees, Commissions and other EIR related balances amortizations

The EIR Engine can also be easily integrated into the LIC Solution® as both tools are based on MS SQL and thus use similar technologies and data flow. The resulting values calculated by the EIR Engine are stored in a database, which can be further used as one of the inputs for the LIC Solution® and other systems.

Learn more about LIC Solution®

Below we illustrate the responses to changes in the financial instrument characteristics based on possible triggering events:

  • EIR (re-)calculation

    • New loan
    • Limit increase
    • Assignment of fee/commission
    • Recalculation after previous data error
    • Reallocation of unrecognized fee/commission - both for limit and account
    • Correction of the fee/commission
    • Changes of repayments schedule due to
      • Additional drawdown
      • Base rate or benchmark rate change
  • Calculating Catch-up Adjustment

    • Change of contractual repayments schedule due to
      • Change of maturity
      • Partial prepayment
      • Concessions granted
      • Payment moratoria
      • Change of margin rate
    • Change in expected repayments schedule due to
      • Change in prepayments or extension patterns
      • Change in expectations about repayments discounts

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