COVID-19: Deferrals of Banking Loans “Second Aid” to Citizens, Firms and Self-Employed Entrepreneurs
Published: April, 2020
Submission: April, 2020
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Since the beginning of the SARS-CoV-2 pandemic, the deferrals of loan payments and other payments (such as leasing payments, etc.) have been provided by credit institutions or other financial institutions voluntarily, upon their negotiations with debtors, upon their discretion and within the formal process for approval of deferred payments with a potential future negative effect on the credit score of the debtor.
In parallel, there have been intensive discussions between the representatives of the state, the National Bank of Slovakia, the commercial banks and other financial institutions on adoption of extraordinary measures coordinated with the state and relating to the deferral for such payments during the coronavirus SARS-CoV-2 pandemic.
Below, please see the up-to-date status of such negotiations as publicly communicated by the Government of the Slovak Republic and representatives of Slovak banks.
This contribution was prepared on 3 April 2020 based on then publicly available information. We monitor the situation closely, and will continue to publish updates to the below information.
On 3 April 2020, at the official press conference, the Prime Minister of the Slovak Republic, together with the Minister of Finance of the Slovak Republic, and the representatives of the Slovak Banking Association (the “SBA”) (in particular Mr Alexander Resch, president of the SBA and chairman of the board of directors and director general of VÚB banka, a.s.; Mr Peter Krutil, member of the board of the SBA and chairman of the board of directors and director general of Slovenská sporitelna, a.s.; Mr Michal Liday, member of the board of the SBA, chairman of the board of directors and director general of Tatra banka, a.s.) announced that the Government of the Slovak Republic agreed with the SBA on the rules for the deferral of mortgage and consumer credit payments during the coronavirus SARS-CoV-2 pandemic.
According to the information communicated at the press conference of 3 April 2020 and subsequently summarized at the website of the Ministry of Finance of the Slovak Republic as of 3 April 2020, the rules for the deferral of such payments, as newly agreed between the Government of the Slovak Republic and the SBA, should be as follows:
According to the published media statements of several governmental representatives, including the Prime Minister of the Slovak Republic, and the Chairman of the National Council of the Slovak Republic, as well as, according to the published media statements of the Governor and the Vice-Governor of the National Bank of Slovakia, there are negotiations currently underway between the state and the banking and non-banking sector, as well as leasing companies in order to agree on the conditions for providing deferrals of payments of loans and payments other than mortgages and consumer credits from banks (already agreed). These should include banking loans for larger companies (other than SMEs), banking overdraft facilities, leasing instalments or payments under credit cards, as well as non-banking loans, etc.
Preliminary information suggests that the goal is to enable that the deferral is granted upon request to any debtor who fulfils the conditions to be stated, without the necessity to undergo a formal procedure for approval of such a deferral. The time of deferral could be e.g. in case of leasing payments some 3 months, plus another 3 months in case of further request, thereby counting together up to maximum of 6 months of total deferral. As to the consequences of such deferral on the credit score of a debtor, it is anticipated that such a deferral should not negatively affect the credit score, similarly as in case of deferral of banking loans already agreed.
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