EBA reactivates its guidelines on moratoria on loan repayments

BNP Paribas Team BNP Paribas

Credit institutions have granted a larger share of moratoria to the borrowers most likely to experience temporary difficulties.

Due to the lengthening of the health crisis, the European Banking Authority decided on 2 December 2020 to reactivate its guidelines on legislative and non-legislative moratoria on loan repayments. This decision aims at easing credit instructions criteria for granting moratoria.

Moratoria granted in relation to the COVID-19 pandemic before 31 March 2021 will not automatically be considered as a forbearance measure. However, such moratoria must have benefitted a sufficiently large set of borrowers and their granting must have been based on a criterion other than solvency. The beneficiaries of moratoria that aim at preventing a default will no longer automatically be considered in default. Only moratoria of less than nine months will benefit from this temporary easing of the rules (excluding those granted before 30 September 2020). Finally, credit institutions will have to document to their supervisor their method for estimating the probability of default of borrowers benefitting from a moratorium.

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BNP Paribas Team

BNP Paribas

BNP Paribas Economic Research Department is a worldwide function, part of Corporate and Investment Banking, at the service of both the Bank and its customers.

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