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    EBA Revises Guidelines on Legislative and Non-Legislative Moratoria

    December 02, 2020

    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.


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    Keywords: Europe, EU, Banking, COVID-19, Reporting, Loan Moratorium, Basel, CRD5, Guideline, EBA

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