Egg Banking released a statement last week clarifying how it plans to address the accounting discrepancies within the Pillar credit card Master Trust. Starting in the beginning of 2007, Egg's 0.83% accounts and Individual Voluntary Arrangements (IVAs) will both be treated as defaulted accounts for the purposes of reporting on Pillar's performance. The resolution should bring an end to uncertainties about the trust's credit profile that began last summer.
Egg stated that it would treat any new IVA as a defaulted account for the purposes of its trust. Also, on a monthly basis, accounts that have not made a payment of 2% for 12 months will be treated as effectively defaulted. Previously, cardholders who entered into an IVA, or had restructured to make minimum payments of 0.83% per month, were not treated as delinquent or charged off as long as the borrowers made the payments agreed upon under the arrangement. The statement does not make clear, however, if payments of less than 2% will be treated as arrears or whether these accounts will simply be charged off after 12 months.