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    EBA to Phase Out Guidelines on Loan Repayment Moratoria

    September 21, 2020

    EBA has decided to phase out the guidelines on legislative and non-legislative moratoria of loan repayments, in accordance with the earlier specified end of September deadline. The guidelines, which were published in the early phases of the COVID-19 pandemic, helped banks to effectively manage a large number of requests from customers wishing to participate in the payment moratoria schemes. However, at this stage, EBA does not consider it "adequate" to further extend such an exceptional measure.

    The regulatory treatment set out in the guidelines will continue to apply to all payment holidays granted under eligible payment moratoria prior to September 30, 2020, thus avoiding cliff effects risks of having to reclassify existing loans abruptly at a later stage. Although banks can continue to support customers with extended payment moratoria after September 30, 2020 also, such loans should be classified on a case-by-case basis according to the usual prudential framework.

     

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    Keywords: Europe, EU, Banking, COVID-19, Credit Risk, Reporting, Loan Moratorium, Basel, EBA

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