The Bank of Slovenia (Banka Slovenije) said that the anti-crisis measures put in place last year in connection with the loan moratorium have achieved their purpose.
“Banks and savings banks approved moratoria for 24,000 borrowers while the measure was in place. The largest number of applications were submitted by far in the months after the declaration of the pandemic (in the spring and in November of last year). There was no major inflow of applications in other months, including just before the measure lapsed. Banka Slovenije notes that dealing with the consequences of the Covid-19 crisis, which has now been with us for more than a year, requires solutions that are viable in the long term. Amid the continued support from monetary and fiscal policy, we, therefore, also expect banks to play a more active role,” the Bank states in a press release.
Over the last year, the law requiring banks to approve moratoria requests from borrowers has aided to quickly address the difficulties faced in the early part of the crisis.
“We expect banks to remain diligent and prudent even after the expiry of the mandatory moratorium provision, and to examine all alternatives in addressing their customers’ difficulties. These include the option of a commercial moratorium, which is also a common measure in non-crisis situations (albeit without different regulatory treatment). Such an agreement may be reached at any time between a bank and a customer temporarily unable to repay a loan. An agreement of this type offers borrowers who, for temporary reasons are unable to regularly repay credit liabilities, the chance to extend or postpone the repayment of the loan. At the same time, it ensures that the bank receives repayment of the loan. In light of the increased risks in connection with individual exposures, banks are required to appropriately reclassify customers (and to create additional impairments and provisions as necessary),” the Bank underlines.
Given the fact that such practices do not address the cases where customers are unable to repay their loans in the long term, Banka Slovenije also called for more permanent solutions. Therefore, the Bank also expects banks to adopt an active approach to any difficulties faced by their customers, customers to be treated individually, and any restructuring of their liabilities to be undertaken within the framework of the ordinary legal options and regulatory treatment.
Covid-related liquidity loans
Banks and savings banks have approved 1,474 applications from firms for new Covid-related liquidity loans by the end of March, with a total exposure of EUR 506.1 million. Of that amount, 99 loans in the total amount of EUR 78.8 million were approved under the law that provides for corporate lending backed by a government guarantee. /ibna