Featured Product

    EBA Guidelines on Use of Payment Moratoria to Address Liquidity Issues

    April 02, 2020

    EBA published detailed guidance on the treatment of legislative and non-legislative moratoria on loan repayments to be applied before June 30, 2020, in light of the COVID-19 crisis. However, EBA may extend this time limit at a late stage, should this be considered necessary. The guidelines are intended to clarify the requirements for public and private moratoria, which, if fulfilled, will help avoid classification of exposures under the definition of forbearance or as defaulted under distressed restructuring. The guidelines apply from the date of translation of the guidelines into all EU languages. EBA also published a revised list of the institutions for supervisory reporting for 2020. The updated list is published around the first quarter of each year and these revisions constitute an annual exercise that is based on the institutions’ year-end data.

    The guidelines have issued following the publication of the EBA statement on the application of the prudential framework regarding default, forbearance, and IFRS 9, in light of COVID-19 measures. The guidelines on legislative and non-legislative moratoria apply in relation to the application of the definition of default in accordance with Article 178 of the Capital Requirements Regulation (CRR) and classification of forbearance in accordance with Article 47b of CRR. These guidelines are addressed to competent authorities as defined in point (i) of Article 4(2) of EU Regulation No 1093/2010 and to credit institutions as defined in point (1) of Article 4(1) of CRR. These guidelines supplement the EBA guidelines on the application of the definition of default as regards the treatment of distressed restructuring.

    EBA sees the payment moratoria as effective tools to address short-term liquidity difficulties caused by the limited or suspended operation of many businesses and individuals, resulting from the impact of COVID-19. In this context, the guidelines clarify that payment moratoria do not trigger classification as forbearance or distressed restructuring if the measures taken are based on the applicable national law, or on an industry or sector-wide private initiative agreed and applied broadly by the relevant credit institutions. In addition, the guidelines recall that institutions must continue to adequately identify the situations where borrowers may face longer-term financial difficulties and classify exposures in accordance with the existing regulation. The requirements for identification of forborne exposures and defaulted obligors remain in place. 

    The guidelines also state that, to allow effective monitoring of the effects of the COVID-19 pandemic and the application of response measures, it is necessary for institutions to collect information about the scope and effects of the use of the moratoria. Institutions are expected to make use of the general payment moratoria in a transparent manner, providing relevant information to their competent authorities, while specific disclosure requirements to the public will be published later.

     

    Related Links

    Keywords: Europe, EU, Banking, COVID-19, Guideline, CRR, Reporting, Credit Risk, NPLs, IFRS 9, Loan Classification, EBA

    Featured Experts
    Related Articles
    News

    EBA Publishes Phase 2 of Technical Package on Reporting Framework 2.10

    EBA published phase 2 of the technical package on the reporting framework 2.10, providing the technical tools and specifications for implementation of EBA reporting requirements.

    July 10, 2020 WebPage Regulatory News
    News

    FASB Proposes to Delay Implementation of Insurance Contracts Standard

    FASB issued a proposed Accounting Standards Update that would grant insurance companies, adversely affected by the COVID-19 pandemic, an additional year to implement the Accounting Standards Update No. 2018-12 on targeted improvements to accounting for long-duration insurance contracts, or LDTI (Topic 944).

    July 09, 2020 WebPage Regulatory News
    News

    APRA Updates Regulatory Approach to Loan Deferrals Amid COVID Crisis

    APRA updated the regulatory approach for loans subject to repayment deferrals amid the COVID-19 crisis.

    July 09, 2020 WebPage Regulatory News
    News

    BCBS and FSB Set Out Recommendations for Benchmark Transition

    BCBS and FSB published a report on supervisory issues associated with benchmark transition.

    July 09, 2020 WebPage Regulatory News
    News

    IAIS Sets Out Recommendations for Benchmark Transition for Insurers

    IAIS published a report on supervisory issues associated with benchmark transition from an insurance perspective.

    July 09, 2020 WebPage Regulatory News
    News

    ESMA Updates Reporting Manual on European Single Electronic Format

    ESMA updated the reporting manual on the European Single Electronic Format (ESEF).

    July 09, 2020 WebPage Regulatory News
    News

    EBA Calls on Resolution Authorities to Consider Impact of COVID Crisis

    EBA published a statement on resolution planning in light of the COVID-19 pandemic.

    July 09, 2020 WebPage Regulatory News
    News

    ECB Guideline on Materiality Threshold for Credit Obligations Past Due

    ECB published a guideline (2020/97), in the Official Journal of European Union, on the definition of materiality threshold for credit obligations past due for less significant institutions.

    July 08, 2020 WebPage Regulatory News
    News

    FED Temporarily Revises FR Y-14 With Respect to PPP and CARES Act

    FED temporarily revised the capital assessments and stress testing reports (FR Y-14A/Q/M) to implement the changes in response to the COVID-19 pandemic.

    July 08, 2020 WebPage Regulatory News
    News

    BCBS Finalizes Revisions to Credit Valuation Adjustment Risk Framework

    BCBS Finalizes Revisions to Credit Valuation Adjustment Risk Framework

    July 08, 2020 WebPage Regulatory News
    RESULTS 1 - 10 OF 5458