_In its Circular 20/741 of 30 April to Luxembourg banks, Commission de Surveillance du Secteur Financier (CSSF) confirms the application of the Guidelines of the European Banking Authority on moratoria on loan repayments applied in the light of the COVID-19 crisis (EBA/GL/2020/02).
The Guidelines clarify:
- the criteria that payment moratoria have to fulfil not to trigger forbearance classification under Article 47b CRR,
- the application of the prudential requirements in the context of these moratoria, and
- the consistent treatment of such measures in the calculation of own funds requirements.
The Circular requires credit institutions to:
- provide CSSF with specific information on exposures where a moratorium has been applied,
- make use of general payment moratoria in a transparent manner, and
- continue identifying and measuring credit risk through their normal policies, as general payment moratoria do not remove the obligations to carefully assess the credit quality of exposures benefiting from any moratorium.
For information on the Luxembourg loan moratorium see our article published with Michael Mbayi in Wildgen's COVID-19 toolkit.