Media Release Regarding the Application of the Temporary Suspension of Credit Obligations - Moratorium


22/03/2020

The Decision on interim measures to mitigate adverse effects of the new Coronavirus disease on the financial system defines the right to a 90-days moratorium on repayment of bank loans granted to all loan beneficiaries, and lessees and borrowers of micro-credit financial institutions. The said decision does not apply to the loan beneficiaries of Atlas banka in bankruptcy and Invest banka in bankruptcy. The bankruptcy administrations of these banks, headed by the bankruptcy boards and bankruptcy trustees, will decide on the application of this measure to their loan beneficiaries as soon as possible, on which loan beneficiaries in these banks under bankruptcy will be notified timely.


Concerning the bank loans beneficiaries, the right described above refers to the beneficiaries of all loan types, including cash loans (secured and unsecured), housing loans, loans to pensioners, consumer loans, investment loans, working capital loans, liquidity loans, lending products for using cards, etc.


The loan repayment moratorium includes the interim suspension of all payments of obligations based on the loan (principal, interest, default interest, etc.) during the moratorium duration. This implies that loan beneficiaries will not repay instalments (principal and interest) during the moratorium period, the amount of which is defined by the repayment schedule constituting an integral part of the loan agreement. Accordingly, if a loan beneficiary activates a moratorium of 90 days and three instalments in the total amount of 900 euros (3 instalments of 300 EUR) are due during that period following the repayment plan, the bank will not charge the stated amount during the moratorium duration. This will result in the loan beneficiary’s increased disposable income.


Borrowers are entitled to a loan repayment moratorium of 90 days and may exercise this right at any time during the temporary measure, as defined by the Decision. This implies that the Borrower may apply for a moratorium of fewer than 90 days (30 or 60 days). The right to activate the moratorium at any time during the temporary measure implies that the borrower not needing or wanting to activate the moratorium immediately after the provisional measure enters into force may activate it later (after a month, two, ...), bearing in mind that the moratorium shall last until the decision expiry.


The loan beneficiary wishing to activate the right to a moratorium shall not visit the bank’s branches. Citizens shall submit a request for the activation of the moratorium by telephone, e-mail or registered mail. Banks will publish detailed instructions on the application procedure in the media or on their websites. These include email addresses, phone numbers and mailing addresses.


The bank has to ensure the moratorium activation within five working days of request receipt. The loan beneficiary shall also send the notification on moratorium accepting to the employer or other person through which it repays the loan in the same way as to the bank (by email, telephone, or registered mail). During the moratorium, employers and other persons through which it repays the loan have to suspend payments related to loan repayments granted by banks within 5 working days.


During the moratorium, banks will neither calculate default interest on arrears, initiate enforcement procedure or enforced collection, nor take other legal actions to collect claims, calculate the past due days, or reclassify loans to a lower classification group. This implies that if the borrower has been overdue in repayment of the claim for 92 days and the bank calculated default interest, banks will cease further calculation of default interest and calculation of the delay at the moratorium activation moment. The bank will not reclassify the said loan into a lower classification group to which the customer would be due if the repayment delays of overdue claims were extended during the moratorium.


The loan repayment period for loan beneficiaries who activated the moratorium shall be extended for the moratorium period, i.e. up to 90 days. The regular contracted interest calculated by the bank during the moratorium duration shall be assigned to the debt, and distributed evenly during the remaining maturity that includes the extension for the moratorium duration without changing other contracted terms and interest calculating methods of calculating interest. Since the activation of moratorium shall not require concluding annexes to the loan agreement, to eliminate the need of visiting the bank’s branches due to the loan described above beneficiary will continue to repay the loan after the moratorium according to the repayment schedule prepared by banks and sent to loan beneficiaries subsequently. We hereby provide examples for some specific loans.


The Bank shall not require from or charge to the Loan Beneficiary any administrative cost associated with the use of the moratorium, including costs of any annexation of the Collateral Agreement. As a result of the moratorium use, the contracted conditions related to the repayment period duration shall not be changed to the loan beneficiaries, given that it is extended for the moratorium duration. The nominal interest rate also remains unchanged and as contracted.


An example of a cash loan in the third repayment year

Loan amount

5,000.00 EUR

Repayment deadline

96 months

96 months + 3 moratorium months

Instalment

66.91 EUR

68 EUR*

Difference in monthly instalment 1.09 EUR

Nominal interest rate

6.49 % annual fixed 


* the amount of instalment after the activation of moratorium lasting three months


An example of a housing loan in the third repayment year

Loan amount

40,000.00 EUR

Repayment deadline

240 months

240 months + 3 moratorium months

Instalment

242.39 EUR

244.83EUR*

Difference in monthly instalment 2.44 EUR

Nominal interest rate

4.00% annual fixed 

* the amount of instalment after the activation of moratorium lasting three months


An example of a loan to pensioners in the second repayment year

Loan amount

2,000.00 EUR

Repayment deadline

36 months

36 months + 3 moratorium months

Instalment

61.66 EUR

62.73 EUR*

Difference in monthly instalment 1.07 EUR

Nominal interest rate

6.9% annual fixed 

* the amount of instalment after the activation of moratorium lasting three months