EBA has decided to re-activate, with revision, the earlier guidelines (EBA/GL/2020/02) on legislative and non-legislative moratoria, propelled by the impact of the second COVID-19 wave and the related government restrictions imposed in many countries in EU. The revised guidelines (EBA/GL/2020/15), which amend the previous guidelines EBA/GL/2020/02, have extended the deadline to apply the moratorium to March 31, 2021 and have introduced two additional safeguards against the risk of an undue increase in unrecognized losses on the balance sheet of banks. The revised guidelines (EBA/GL/2020/15) apply from December 02, 2020.
The reactivation of these guidelines will ensure that loans, which had previously not benefitted from payment moratoria, can now also benefit from them. As part of the re-activation of these guidelines, EBA has introduced the following new constraints to ensure that the support provided by moratoria is limited to bridging liquidity shortages triggered by the new lockdowns and that there are no operational restraints on the continued availability of credit.
- Only loans that are suspended, postponed, or reduced under general payment moratoria not more than nine months in total, including previously granted payment holidays, can benefit from the application of the guidelines
- Credit institutions are requested to document to their supervisor their plans for assessing that the exposures subject to general payment moratoria do not become unlikely to pay. This requirement will allow supervisors to take any appropriate action.
EBA has also enhanced the disclosure requirements related to the use of public moratoria and will soon release, as part of its annual EU-wide Transparency Exercise, additional information on the use of moratoria across the EU banking sector.
Keywords: Europe, EU, Banking, COVID-19, Reporting, Loan Moratorium, Basel, CRD5, Guideline, EBA
Previous ArticleBDE Updates SII List and Reporting Instructions for Banks
ECB published Guideline 2021/975, which amends Guideline ECB/2014/31, on the additional temporary measures relating to Eurosystem refinancing operations and eligibility of collateral.
EIOPA published a report, from the Consultative Expert Group on Digital Ethics, that sets out artificial intelligence governance principles for an ethical and trustworthy artificial intelligence in the insurance sector in EU.
HKMA published the seventh and final issue of the Regtech Watch series, which outlines the three-year roadmap of HKMA to integrate supervisory technology, or suptech, into its processes.
EC launched a targeted consultation to improve transparency and efficiency in the secondary markets for nonperforming loans (NPLs).
BIS, Danmarks Nationalbank, Central Bank of Iceland, Norges Bank, and Sveriges Riksbank launched an Innovation Hub in Stockholm, making this the fifth BIS Innovation Hub Center to be opened in the past two years.
FDITECH, the technology lab of FDIC, announced a tech sprint that is designed to explore new technologies and techniques that would help expand the capabilities of community banks to meet the needs of unbanked individuals and households.
EC released the EU Taxonomy Compass, which visually represents the contents of the EU Taxonomy starting with the EU Taxonomy Climate Delegated Act.
FDIC is seeking comments on a rule to amend the interagency guidelines for real estate lending policies—also known as the Real Estate Lending Standards.
EIOPA published its annual report, which sets out the work done in 2020 and indicates the planned work areas for the coming months.
The ESRB paper that presents an analytical framework that assesses and quantifies the potential impact of a bank failure on the real economy through the lending function.