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On the application of the EBA Guidelines on loan repayment moratoria in the Lithuanian market
In view of the unprecedented situation caused by the spread of COVID-19, on 17 April 2020, the Supervision Service of the Bank of Lithuania adopted a decision on the application of the Guidelines on legislative and non-legislative moratoria on loan repayments applied in the light of the COVID-19 crisis (hereinafter – the Guidelines) approved on 2 April 2020 by the European Banking Authority (hereinafter – EBA) which unites all supervisory authorities in the European Union. The Guidelines provide for a more favourable interpretation of supervisory requirements where a country imposes a public (legislative) moratorium or market participants jointly agree to apply a (non-legislative) moratorium to their customers. One of the prerequisites set in the EBA Guidelines is that the deferral of loan repayments must be accessible to a sufficiently large number of borrowers and that all of them must be able to enjoy equal terms and conditions for the deferral of repayments, irrespective of their financial situation. The regime imposed by the Guidelines concerns moratoria announced only as a response to COVID-19 up until 30 June 2020. The Bank of Lithuania has initiated a dialogue with market participants on the possibility of introducing a horizontal sector-wide moratorium and served as a market intermediary in order to receive answers from the Competition Council, the European Commission and the EBA as soon as possible. The Bank of Lithuania hopes that all socially responsible Lithuanian credit institutions, having conducted an assessment of their financial capacity, will be able to reach an adequate joint agreement on loan moratorium without additional interference on the part of the regulator.
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