Featured Product

    CBM Issues Directive on Moratoria on Credit Facilities Amid Pandemic

    April 23, 2020

    CBM issued a Directive on moratoria on credit facilities to alleviate the challenges posed by COVID-19 pandemic. The Directive has been issued pursuant to the Moratorium on Credit Facilities Regulations issued by the Minister for Health, in consultation with the Minister for Finance and Financial Services. Under the Directive, credit and financial institutions have been directed to offer a six-month moratorium on repayments on capital and interest for borrowers that have been negatively affected by the pandemic. The Directive defines the eligibility for the moratorium and other conditions related to the implementation of the provisions of the Moratorium on Credit Facilities Regulations. Post this Directive, CBM also issued a clarification on the treatment of accrued interest during the moratorium period. Additionally, CBM has published frequently asked questions (FAQs) related to the Directive.

    The moratorium applies to credit facilities sanctioned prior to March 01, 2020—whether to individuals, households or businesses—and who have been negatively affected by the pandemic. The moratorium is not granted automatically, and the borrower will need to apply to the respective credit or financial institution. Applications by borrowers are to be made with their respective credit or financial institution until June 30, 2020. The six-month moratoria period will start with effect from the date of approval of the application. Some of the key points in the Directive include the following:

    • Credit and financial institutions have the right to refuse the application as long as this is done within the terms of the Directive. 
    • Borrowers can apply to forego payments of both capital and interest completely for six months, and can also opt to continue to pay the interest but not the capital.
    • The payments missed during the moratorium will be paid during a six-month extension to the term of the credit facility. If the credit facility was due to mature at retirement age, the missed payments would be spread evenly throughout the remaining term of the credit facility after the end of the moratorium period.

    It was also clarified that, during the course of the moratorium, interest is to be accrued but not capitalized, in other words no interest compounding is to occur during this period. This accrued interest would subsequently be recovered on a straight line basis (spread equally) across the remaining modified maturity term of the loan after the end of the moratorium period. 

     

    Related Links

    Keywords: Europe, Malta, Banking, COVID-19, Loan Repayment, Loan Moratorium, Credit Risk, FAQ, CBM

    Featured Experts
    Related Articles
    News

    EBA Clarifies Use of COVID-19-Impacted Data for IRB Credit Risk Models

    The European Banking Authority (EBA) published four draft principles to support supervisory efforts in assessing the representativeness of COVID-19-impacted data for banks using the internal ratings based (IRB) credit risk models.

    June 21, 2022 WebPage Regulatory News
    News

    EP Reaches Agreement on Corporate Sustainability Reporting Directive

    The European Council and the European Parliament (EP) reached a provisional political agreement on the Corporate Sustainability Reporting Directive (CSRD).

    June 21, 2022 WebPage Regulatory News
    News

    PRA Consults on Model Risk Management Principles for Banks

    The Prudential Regulation Authority (PRA) launched a consultation (CP6/22) that sets out proposal for a new Supervisory Statement on expectations for management of model risk by banks.

    June 21, 2022 WebPage Regulatory News
    News

    EC Regulation Amends Standards for Calculating Credit Risk Adjustments

    The European Commission (EC) published the Delegated Regulation 2022/954, which amends regulatory technical standards on specification of the calculation of specific and general credit risk adjustments.

    June 21, 2022 WebPage Regulatory News
    News

    BIS Hub Updates Work Program for 2022, Announces New Projects

    The Bank for International Settlements (BIS) Innovation Hub updated its work program, announcing a set of projects across various centers.

    June 17, 2022 WebPage Regulatory News
    News

    EIOPA Issues Cyber Underwriting Proposal, Statement on Open Insurance

    The European Insurance and Occupational Pensions Authority (EIOPA) published two consultation papers—one on the supervisory statement on exclusions related to systemic events and the other on the supervisory statement on the management of non-affirmative cyber exposures.

    June 17, 2022 WebPage Regulatory News
    News

    US Senate Members Seek Details on SEC Proposed Climate Disclosure Rule

    Certain members of the U.S. Senate Committee on Banking, Housing, and Urban Affairs issued a letter to the Securities and Exchange Commission (SEC)

    June 16, 2022 WebPage Regulatory News
    News

    EIOPA Consults on Review of Securitization Framework in Solvency II

    The European Insurance and Occupational Pensions Authority (EIOPA) published a consultation paper on the advice on the review of the securitization prudential framework in Solvency II.

    June 16, 2022 WebPage Regulatory News
    News

    UK Authorities Issue Regulatory and Reporting Updates for Banks

    The Prudential Regulation Authority (PRA) issued a statement on PRA buffer adjustment while the Bank of England (BoE) published a notice on the statistical reporting requirements for banks.

    June 15, 2022 WebPage Regulatory News
    News

    BCBS Issues Climate Risk Principles while HKMA Expresses Its Support

    The Basel Committee on Banking Supervision (BCBS) issued principles for the effective management and supervision of climate-related financial risks.

    June 15, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8280