EBA offers banks some breathing space
The decision by the European Banking Authority to provide payment holidays for all loans that look set to go bad due to the coronavirus crisis grants Greek lenders greater flexibility for tranche postponements and loan restructurings for households and corporations.
The decision concerns corporate and household loans that were properly serviced up to end-2019 but risk being delayed due to the epidemic. For those loans, local lenders have decided to suspend the payment of installments by three to six months, depending on the duration of the Covid-19 crisis.
The EBA decision, covered by a general directive issued by the European Central Bank, concerns all loans to companies or individuals with a payment freeze decided either by the government or the banks themselves. These loans will not be branded nonperforming but will rather receive a separate classification, which...