BNB Allows Relaxation in Loan Payments Amid COVID-19 Outbreak
The Governing Council of BNB approved the procedure for deferral and settlement of liabilities payable to banks and their subsidiaries in the backdrop of COVID-19 pandemic. The document on the procedure for deferral and settlement of liabilities constitutes a private moratorium within the meaning of the EBA guidelines on legislative and non-legislative moratoria on loan repayments applied in the light of the COVID-19 crisis. On April 03, 2020, the Governing Council of BNB had issued a statement on its decision to comply with the EBA guidelines.
Commercial banks that have accepted to implement the approved procedures for deferral and settlement of payable liabilities will publicly announce the proposed concessions on their websites, the banks’ public premises, and in any other appropriate manner. The approved private moratorium provides opportunities for changes in the principal and/or interest payment schedule of liabilities, without changing any key parameters of the loan agreement such as the already agreed interest. Liabilities may be deferred for a term of up to six months, ending on December 31, 2020. The deferred liabilities must have been regularly serviced or not more than 90 days past due as of March 01, 2020.
Customers should declare explicitly to their servicing bank that they wish to avail of the proposed concessions. Banks may also agree with their customers different individual deferral and concession schemes, other than the ones provided under this procedure. In such cases, banks may not avail of the temporary principle, implemented by the approved moratorium and following the EBA guidelines, that the deferral or concession does not result in classification of exposures in default or forbearance.
Keywords: Europe, Bulgaria, Banking, COVID-19, Loan Moratorium, Credit Risk, EBA, BNB
Victor Calanog, Ph.D.
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