EU banking watchdog re-launches debt relief measures for loans affected by COVID
LONDON, Dec. 2 (Reuters) – European Union regulators have relaunched guidelines to allow banks to grant a new round of loan repayment holidays to customers affected by the coronavirus without triggering a sharp increase in provisioning that would reduce the flow of credit.
The European Banking Authority (EBA) has said that due to the second wave of COVID-19 infections, guidelines for banks that expired on September 30 are being reactivated until March 31, 2021.
As the first round of March lockdowns shut businesses down, banks began to grant payment holidays on business loans, mortgages and other types of credit.
Loans totaling 871 billion euros ($ 1.05 trillion) had benefited from the relief measures in June.
Without the guidelines initially introduced by EBA in April, banks would have been forced to automatically start provisioning defaulted loans 90 days after the due date, making them less likely to continue lending to the affected economy. by COVID.
The EBA said loans that did not previously benefit can now also benefit from the reissued guidelines, but said it introduced two “constraints” this time around to ensure problem loans are recognized by the EBA. lenders one way or another.
Loans were only eligible for a repayment holiday of nine months in total and banks must make plans to assess whether loans subject to a payment holiday were likely to default, EBA said.
$ 1 = 0.8296 euros Reporting by Huw Jones; Editing by Edmund Blair