29 January 2021
The European Banking Authority (EBA) published today additional clarifications on the application of the prudential framework in response to issues raised as a consequence of the COVID-19 pandemic. These clarifications update the FAQ section of the EBA Report on COVID-19 implementation policies, which provides clarity on the implementation of (i) the EBA Guidelines on moratoria and (ii) the EBA Guidelines on COVID-19 reporting and disclosure. This Report is part of the EBA’s wider monitoring of the implementation of COVID-19 policies as well as of the application of existing policies under these exceptional circumstances.
The Report includes additional technical clarifications on the application of the Guidelines on moratoria related to the recent re-activation of the EBA guidelines on payment moratoria. In particular, the EBA has provided clarifications on the functioning of the 9-month cap, which limits the period of time for which payments on a certain loan can be suspended, postponed or reduced as a result of the application (and reapplication) of general payment moratoria.
These clarifications explain how to apply the Guidelines on moratoria when assessing forbearance classification and how to determine whether there is a diminished financial obligation in relation to moratoria applied to loans exceeding the 9-month cap.
As regards reporting and disclosure, the updated Report covers the treatment of loans and advances subject to expired moratoria. In particular, it clarifies that when a moratorium expires, the loans and advances subject to this expired measure should be reported, regardless of whether they are subject to another measure.