Due to the difficult economic situation in the EU caused by the increasing morbidity of COVID-19, the European Banking Authority (EBA) has decided to reactivate its Guidelines on legislative and non-legislative moratorium EBA/GL/2020/02 with new deadline – 31st March 2021, which will replace the previous deadline – 30th September 2020.
The EBA has introduced two new constraints to ensure that the support provided by moratorium provisions is limited to bridging liquidity shortages triggered by the COVID-19 pandemic:
- Only the loans that are suspended for less than 9 months in total, which includes previously granted payment holidays, can benefit from the extension granted by the EBA. For a loan contract where a payment suspension of 6 months has already been granted before 30 September 2020, the bank may agree to a further payment suspension of not more than 3 months until 31st
- The banks are requested to notify the Bulgarian National Bank their plans for assessing borrowers who have benefit from the payment holiday and their unlikeness to pay.
The moratorium does not apply to new loans granted after the launch of the moratorium on April 2020, as the EBA has clearly and unequivocally pointed out in the Guidelines.
After the announcement, the Governing Council of the Bulgarian National Bank has decided to adopt the amendment of the Guidelines EBA/GL/2020/02. Now, the Association of the Banks in Bulgaria has the opportunity to present its new project on the order and the procedures for extending the private moratorium on the bank loans due to the COVID-19 crisis.
If and when the Association of the Bulgarian banks deposits a project and only after the Bulgarian National Bank approves the project will be clear the order and the procedures for suspension of the payable obligations.