BNB Extends Loan Moratorium, Maintains CCyB at 0.5% Amid Crisis

By Regulatory News

July 14, 2020

Coronavirus, Regulatory Reporting: EU, Regulatory Capital

BNB announced that it has approved a request of the Association of Banks in Bulgaria to extend the moratorium on payments amid the COVID-19 crisis. Recently, BNB had also announced its decision to comply with the EBA guidelines on reporting and disclosures of exposures subject to measures implemented in response to the COVID-19 crisis. Another announcement from BNB, in the context of the ongoing challenges, is its decision to maintain the countercyclical capital buffer (CCyB) applicable to credit risk exposures in the Republic of Bulgaria to 0.5% for the third quarter of 2020. Given the expected slowdown in economic activity and the associated increase in non-performing loans, which would put pressure on the profitability and capital position of credit institutions, maintaining the CCyB at 0.5% in the third quarter of 2020 will contribute to the sustainability of banking system, according to BNB. The BNB Governing Council will decide on the level of CCyB buffer applicable for the fourth quarter of 2020 in September 2020.

On July 09, 2020, the Governing Council of BNB had decided to comply with the EBA guidelines (GL/2020/08) on legislative and private moratoria on credit payments applied in context of the COVID-19 crisis. These guidelines, which amend the earlier EBA guidelines (GL/2020/02) on this, extend by three months, from June 30, 2020 to September 30, 2020, the deadline for the application of moratorium on payments. In line with this, BNB has approved an extension of the term for submission of a request by clients of the banks for deferral of liabilities and their approval by the banks until September 30, 2020. BNB also extended the deadline for deferral of liabilities of bank customers until March 31, 2021. The extension of the deferral procedure applies to exposures for which no request for deferral of payments has been submitted before June 22, 2020.

In addition, BNB will start publishing monthly aggregated information in connection with the received and approved requests to banks for deferral of liabilities. Information for April, May, and June 2020 will be published on July 31, 2020. For the following months of the approved order, monthly information will be published at the end of the last working day of the month following the reporting period. As reporting and disclosure requirements are in the context of the COVID-19 pandemic, they are expected to be limited in time. The expected period for their application is 18 months.

Related Links (in Bulgarian)

Keywords: Europe, EU, Bulgaria, Banking, CCyB, Basel, COVID-19, Reporting, Credit Risk, Regulatory Capital, Loan Moratorium, EBA, BNB

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