While monitoring the impact of the second pandemic wave, and in light of the restrictions imposed in many EU Member States, the European Banking Authority (EBA) has reactivated until 31 March 2021 its guidelines on legislative and non-legislative moratoria adopted on 2 April 2020 (the “Guidelines”).
For the purpose of ensuring that the possible enterprises’ insolvency be reflected in the banks’ capital, the following constraints have been also introduced:
- only loans suspended, postponed or reduced under general payment moratoria for no more than nine months in total (including previously granted payment holidays) will benefit from the Guidelines’ application; and
- credit institutions must document to the competent national authority (for Italy, the Bank of Italy) their plans for assessing that the exposures subject to moratoria do not become “unlikely to pay (UTP)”. As a result, national supervisors will be able to verify the robustness of banks’ UTP’s assessment procedures in the on-going crisis.
Guidelines’ reactivation: The EBA reactivates its Guidelines on legislative and non-legislative moratoria
#legalnews #eulaw #bankinglaw #COVID-19 #update #CarotenutoStudioLegale