On 2 December 2020, the European Banking Authority (EBA) announced that it was reactivating its guidelines on legislative and non-legislative moratoria. The purpose of the reactivation is to ensure that loans, which have not previously benefitted from payment moratoria, can benefit from them. The guidelines, which apply until 31 March 2021, include additional safeguards against the risk of an undue increase in unrecognised losses on banks’ balance sheet:
- Only loans that are suspended, postponed or reduced under general payment moratoria not more than 9 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.