Circular Letter No. CC/2020/00000022

Circular Letter No. CC/2020/00000022 Sent to: Credit Institutions and Financial Companies. Mod. 99999924/T – 01/14 Subject: Guidelines regarding public and private moratoria applied to credit operations in the context of the COVID-19 pandemic (EBA/GL/2020/02)

The European Banking Authority (EBA) published, on April 2, 2020, the Guidelines on public and private moratoria applied to credit operations in the context of the COVID-19 pandemic (EBA/GL/2020/02) (hereinafter referred to as the "Guidelines"), which apply from the date of their publication in all official languages of the European Union. These Guidelines can be consulted on the EBA website.

The Bank of Portugal emphasizes the importance of credit institutions and the entities listed in Article 1 of Bank of Portugal Notice No. 11/2014 (hereinafter referred to as institutions) giving adequate compliance with the Guidelines, which must be followed and applied in the context of the legislation and regulation in force applicable to them. These Guidelines will be taken into consideration by the Bank of Portugal in the interpretation of the legal and regulatory provisions applicable to institutions, for the purpose of verifying compliance with them.

The Guidelines establish the terms and conditions that the extension of payment deadlines inherent to credit operations, associated with a public or private moratorium (hereinafter referred to as "General Payment Moratoria") created in the context of the COVID-19 pandemic, must comply with in order not to lead to the verification of a situation of default of the debtor, nor to the verification of the concept of a forbearance measure, under the terms and for the purposes set out in Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 ("CRR") and the EBA Guidelines relating, inter alia, to the application of the definition of default under Article 178 of the CRR.

Covered, under the terms defined by the Guidelines, are the General Payment Moratoria applied before June 30, 2020, including those already in force on the date of application of the Guidelines. If necessary, the EBA may extend this deadline.

The Guidelines do not prejudice the application of the legal and regulatory provisions in force regarding risk assessment, management, and control. Thus, during the validity of the General Payment Moratoria, institutions must continue to apply their credit risk assessment procedures regarding risky positions benefiting from these measures and identify any situations that may present a significant increase in risk.

Mod. 99999924/T – 01/14 Institutions must collect and maintain a set of documentation regarding the General Payment Moratoria, public or private, that they are applying, as well as notify the Bank of Portugal about private General Payment Moratoria directed at their clients, in accordance with the provisions of the Guidelines.

EBA Guidelines GL/2020/02 (English version): https://eba.europa.eu/sites/default/documents/files/document_library/Publications/Guidelines/2020/Guidelines%20on%20legislative%20and%20non-legislative%20moratoria%20on%20loan%20repayments%20applied%20in%20the%20light%20of%20the%20COVID-19%20crisis/EBA-GL-2020-02%20Guidelines%20on%20payment%20moratoria.pdf