We regularly share news with you, that come from our originators, and we continue to synthesize the most important for our investors in the current circumstances. Today we will take a look at the situation in the respective countries of our originators. We are especially paying attention to the moratoriums and their effect.
In part of the countries, the borrowers have the possibility to stop/extend the loan term, or to decrease the payments for a certain period of time. This affects the entire payment period and sometimes – the amount of the debt. The moratorium is often implemented by the country state, but there are cases where the Central Bank in the country does it. It is also possible that the financial institutions do it voluntary.
Bulgaria (EasyCredit, Viva Credit)
Until 22.06.2020, Bulgarian citizens and companies, that have borrowed a loan from a bank/subsidiaries of a bank, who are meeting certain requirements, will have the opportunity to request to not pay interest and principle in the span of 6 months, but not later than the end of 2020.
After its validation on 10.04.2020, the document, presented by the Association of Banks in Bulgaria (ABB), is a partial moratorium in the sense of the Direction of the European Bank Authority (EBA). The moratorium affects individuals and companies, that have been granted a loan from a bank or subsidiary of a bank, that are meeting certain requirements. One of the requirements is to have been paying your loan regularly, or with no more than 90 days of delay until the 1st of March 2020. The moratorium will only be for the banks or subsidiaries of banks. It will not be valid for nonbank financial institutions in the country. It will affect loans, that have been granted up to 31.03.2020, as the loan maturity extension can be no later than the end of 2020.
The clients have to expressly make a request to their bank that they would like to take advantage of the offered reliefs. The moratorium can cover unpaid installments before the request if the borrower has such preference. If the financial state of the borrower improves, they can forsake the grace period earlier. The change will be valid for the payment schedule only, and it will not affect other conditions of the loan.
The banks will charge interest during the moratorium, but they will not be owed. A new payment schedule will be activated after this period. The payments can be evenly distributed throughout the entire period of the loan. The end date can only be moved up to the end of 2020.
The European authorities require from the banks to track ability of their clients to pay their loans as usual, and if there are indications for worsening, the information should be accounted.
Romania (iCredit, Fast Finance, Adwisers)
The state of emergency in the country is in force since the 16th of March. Individuals and companies in Romania have the right to request a grace period for their loan payments (regardless if the loan is from a bank or a nonbank financial institution). They are required to present a declaration, in which they declare that their income has been affected by Covid-19. Just like in Bulgaria, the loan extension can be no longer than up to the end of 2020, and it is without any extra fees. The moratorium in Romania will be valid for all loans, granted before 30.03.2020, and that are meeting certain requirements:
– Principals not matured at 30.03.2020
– No early repayment announced by the creditor at 30.03.2020
– No delays are registered regarding the payment of the principal at 16.03.2020 OR at the moment of submission the suspension request.
– The suspension request is submitted not later than 14.05.2020.
– Impossibility for the debtor to pay his obligations because of some of the following reasons: the debtor or his family members are in technical unemployment, were dismissed, their salary was reduced, they are in quarantine or isolation, etc. No evidences are necessary, only statement in this regard.
The maximum grace period can be no longer than up to the end of 2020.
One of the most affected countries by the virus. A three months moratorium for mortgage loans is in force for the risk groups. Postponing payments of rent and overhead costs is also in force for the risk groups. Grace period requests have to be accompanied by documents that prove the requestor’s finances have been affected by the virus. Interest free loans will be offered to those who have a significant decrease in their income.
Small and medium-sized enterprises (SME) with turnover up to 6 million euro will be able to delay their tax payment with 6 months, without any penalties for the first 3 months. A budget on the amount of 20 billion euro to fight the virus has been approved, half of which will be directed to help SME, as well as self-insured persons.
The maximum annual interest rate in the country have been decreased to 8%, and the maximum interest of delayed payments – to 12%. The allowed maximum amount of the expenses outside of the interest for personal loans has been temporarily decreased – it can no longer surpass 15% of the principle, +6% for every year of the loan period, and it cannot surpass 45% of the principle size at any circumstances.
Latvia (NordCard, Monify)
There is no moratorium in Latvia. The loan payment deferrals are an initiative of the banks.
The local banks are giving the possibility for loan payment deferrals to their borrowers for a period up to 12 months. The actions of the nonbank financial institutions are being strictly followed by consumer protection centers in order to ensure that they approach the challenging circumstances with understanding. The Alternative Banking Association in Latvia has agreed to individually revise every borrower’s case until the bank vacation is active.
The country will pay 75% of the employees’ monthly salaries, but the amount will not exceed 700 euro per month. The businesses, affected by the crisis, will be able to apply for a tax payment deferral for a period up to 3 years.