On 21 September 2020, the European Banking Authority (EBA) announced that it will phase out its guidelines on legislative and non-legislative payment moratoria in accordance with its end of September deadline.
The EBA guidelines on legislative and non-legislative loan repayments moratoria were published on 2 April 2020 to ensure that EU banks, while maintaining comparable metrics, would be able to grant payment holidays to customers avoiding the automatic classification of exposures under the definition of forbearance or as defaulted under distressed restructuring. This regulatory measure was taken in light of the high degree of disturbance caused by the COVID-19 pandemic and acknowledged the crucial role played by banks in supporting ongoing liquidity challenges faced by European businesses during the pandemic expansion.
The regulatory treatment set out in the guidelines will continue to apply to all payment holidays granted under eligible payment moratoria prior to 30 September 2020. Banks can continue supporting their customers with extended payment moratoria after 30 September 2020, the EBA states that such loans should be classified on a case-by-case basis according to the usual prudential framework.