On 2 April 2020, the European Banking Authority (EBA) published guidelines on general payment moratoria. BaFin incorporated these guidelines into its administrative practice on 3 April 2020. The EBA phased out the guidelines in accordance with its deadline of 30 September 2020. BaFin provided information about this on its website on 22 September 2020.

On 2 December 2020, in response to the second wave of the coronavirus pandemic, the EBA reactivated its guidelines. BaFin provided information about this on the same day. Payment relief that is granted to a borrower before 31 March 2021 can therefore fall under a general payment moratorium. However, a new payment relief measure for a loan – including any payment relief that has already been granted for that loan – may only apply to payments due within a total of nine months or that will be due in future. The EBA also requests that institutions explain to their supervisory authorities how they intend to assess whether the obligor is unlikely to repay the debt to the institution in full (margin no. 17 (bis)). This is to allow supervisors to gain an impression of how institutions have implemented the following requirement under margin no. 14: “Throughout the duration of the moratorium, institutions should assess the potential unlikeliness to pay of obligors subject to the moratorium in accordance with policies and practices that usually apply to such assessments”.

Margin no. 17 (bis) explicitly only refers to “obligors subject to any legislative or non-legislative general payment moratorium as referred to in paragraph 14.” This requirement also applies to payment moratoria for which institutions provided notification between 2 April 2020 and 30 September 2020. It expressly does not apply to loans that are currently (as of 1 January 2021) no longer subject to a general payment moratorium. A loan is only deemed to be subject to a general payment moratorium as of 1 January 2020 if the payments due before and after this date are lower than they would have been without a payment moratorium. For example, under the German legislative moratorium, obligors of a consumer loan contract under article 240 section 3 (1) of the Introductory Act to the German Civil Code (Einführungsgesetz zum Bürgerlichen Gesetzbuche – EGBGB) could request that payments due between 1 April 2020 and 30 June 2020 be postponed. In this case, the payments due before and after 1 January 2021 would not be lower than they would have been without a payment moratorium. The loan would therefore not be deemed subject to the general payment moratorium as of 1 January 2021 even though postponed payments could be due after 1 January 2021, since under article 240 section 3 (5) of the EGBGB, for example, all contractual payments are postponed by three months.

German institutions not subject to direct supervision by the European Central Bank (ECB) should follow the steps below when notifying BaFin, in accordance with margin no. 17 (bis), of loans that were subject to a general payment moratorium as of 31 December 2020:

1. Institutions should ensure that, in the assessment of an obligor’s potential unlikeliness to pay, they apply the policies and practices that usually apply to such assessments for loans that are not subject to a general payment moratorium. (See margin no. 14 of Guidelines EBA/GL/2020/02). For loans subject to a general payment moratorium, institutions should perform the assessment of unlikeliness to pay based on the most up-to-date schedule of payment resulting from the application of the general payment moratorium. (See margin no. 16 of Guidelines EBA/GL/2020/02)
2. Case A: Based on step 1, in the assessment of an obligor’s potential unlikeliness to pay, the institution in question applies the policies and practices that usually apply to such assessments for loans that are not subject to a general payment moratorium. For the obligor or group of obligors concerned (e.g. defined by the scope of application of a risk classification system), the institution notifies the particular Regional Office of the Deutsche Bundesbank and the division at BaFin that are responsible for supervising the institution.
   Case B: Step 1 is not applied as described in case A. In respect of the obligor concerned, the institution transfers to the competent Regional Office of the Deutsche Bundesbank and the responsible division at BaFin a plan “outlining the process, sources of information and responsibilities in the context of the assessment of the potential unlikeliness to pay of obligors subject to any legislative or non-legislative general payment moratorium as referred to in paragraph 14.” (See margin no. 17 (bis)).

BaFin will contact the organisers of non-legislative moratoria with regard to the publication of this FAQ on its website. The organisers are listed in the FAQ “Which payment relief measures has BaFin notified to the EBA as general payment moratoria within the meaning of margin no. 10 of the EBA guidelines EBA/GL/2020/02?” BaFin will ask the organisers to notify the institutions participating in the respective payment relief initiative of their obligations under margin no. 17 (bis) of the amended EBA Guidelines (EBA/GL/2020/02) and to inform them of the procedure described in this FAQ.

Notifications under step 2 (case A or B) should be submitted to BaFin by 31 March 2021.

For payment relief initiatives notified to BaFin in the context of the reactivation of the EBA Guidelines (EBA/GL/2020/02), BaFin has established the following administrative practice:

1. In order for a payment relief initiative to be regarded as a modification of an existing general payment moratorium and not as a new payment relief initiative, the scope of exposures covered must be similar to the previous general payment moratorium (margin no. 14 under “Background and rationale”, EBA/GL/2020/15). This is not deemed to be the case if, in particular, the number of risk exposures covered is significantly reduced through restrictions applied to the circle of participating institutions, or, in individual institutions, the scope of risk exposures covered is changed through the exclusion or inclusion of individual loan types or obligor groups. If a payment relief initiative is classified as a new payment relief initiative, the transitional provision under margin no. 20 of EBA/GL/2020/02 (in the version EBA/GL/2020/15) is not applicable. However, institutions might still have de facto participated in the new payment relief initiative – including the limitation of payment relief to a maximum of nine months – before notification was given.
2. Payment relief granted by an institution between 1 October 2020 and 1 December 2020 can only be regarded as subject to a general payment moratorium if the institution granted the payment relief within the scope of a payment relief initiative in compliance with all of the requirements of the EBA Guidelines (EBA/GL/2020/02). Unlike general payment moratoria for which notification was provided between 2 April 2020 and 30 September 2020, payment relief granted on an individual basis cannot be regarded as part of a general payment moratorium, even if it meets the formal conditions of the general payment moratorium with regard to the changes in the payment schedule.

The information below is not affected by the changes to the EBA Guidelines (EBA/GL/2020/02). This information also applies to payment relief initiatives notified to BaFin in the context of the reactivation of the EBA Guidelines (EBA/GL/2020/02).

The lending provisions under Article 240 section 3 (1) of the EGBGB are an example of a general payment moratorium.

If a payment moratorium includes a concession towards the participating obligors, this does not hinder its classification as a general payment moratorium, even if the concession leads to a decrease in the present value of more than 1% for the lending institution.

The requirements under margin no. 17 (c) and (e) of the EBA Guidelines (EBA/GL/2020/02) set out that institutions are required to provide their national competent authorities with information on the total number of obligors and exposures within the scope of a non-legislative general payment moratorium. Furthermore, the following applies to all general payment moratoria: under margin no. 19 (a) of the EBA Guidelines (EBA/GL/2020/02), institutions are required to identify the exposures or obligors for which the general payment moratorium was offered. These requirements are deemed fulfilled if the institution provides or, as applicable, has available such information for a set of obligors or exposures, respectively, that according to the institution includes the obligors or exposures in question, even if this set also includes further obligors and exposures. To give an example, BaFin will not raise any objections to institutions identifying exposures beyond those for which it is clear to the institution that the obligor in question “has lost income due to the exceptional circumstances caused by the spread of the COVID-19 pandemic, making it unreasonable to expect them to repay the amount owed” (Article 240 section 3 (1) sentence 1 of the EGBGB) as exposures for which the legislative general moratorium under Article 240 section 3 of the EGBGB was offered.

BaFin’s administrative practice as regards the processing of payment relief initiatives is as follows:

Non-legislative payment moratoria are subject to a two-step notification procedure:

1. Participating institutions (or organisations acting on their behalf, such as industry associations) must notify BaFin in accordance with margin no. 17 should they decide to apply a payment relief initiative.
2. If BaFin determines that the payment relief measures meet the criteria under margin no. 10 of the guidelines, BaFin will notify the payment relief measure to the EBA as a non-legislative moratorium.

Both significant institutions (SIs) and less significant institutions (LSIs) make use of general payment moratoria. The notifications BaFin sends to the EBA are also sent to the European Central Bank. In addition, the notification is published in German on the BaFin-website in the answer to the FAQ "Which payment relief measures has BaFin notified to the EBA as general payment moratoria within the meaning of margin no. 10 of the EBA guidelines EBA/GL/2020/02?”. BaFin expects institutions that make use of a non-legislative general payment moratorium to also publicly communicate the payment relief measures themselves (e.g. on their website).

Before submitting their notification, the organiser of a payment relief initiative should regularly consult with BaFin and with the Deutsche Bundesbank on the question of whether the planned payment relief measure meets the criteria under margin no. 10 of the EBA guidelines EBA/GL/2020/02. The administrative practice which BaFin has developed in collaboration with the EBA is based on the following understanding of the objective of the guidelines:

In the COVID-19 crisis, states and institutions are taking relief measures that apply to a large group of obligors predefined on the basis of broad criteria. This serves above all to help the affected obligors through liquidity shortages. Ideally, the institution would negotiate an individual solution with each obligor, estimating the probability that an obligor will meet its obligation towards the institution in full on a case-by-case basis. If a large number of an institution's obligors are affected by the crisis, such a case-by-case assessment may not be possible at short notice or for all of the affected obligors. The guidelines therefore clarify how such payment relief measures are to be classified in particular with regard to the classification as a forbearance measure within the meaning of Article 47b of the Credit Requirements Regulation (CRR) and the definition of default under Article 178 of the CRR.

The criteria under margin no. 10 of the guidelines are arranged in such a way that institutions cannot be certain that obligors that would probably be able to meet their payment obligations in full in spite of financial losses resulting from the COVID-19 crisis will not also receive financial relief. Against this background, the guidelines make it clear that financial relief afforded to obligors as part of a general payment moratorium cannot in itself be classified as a forbearance measure within the meaning of Article 47b of the CRR or as a distressed restructuring within the meaning of Article 178(3)(d) of the CRR. (Margin no. 11)

Purely hypothetically, it is conceivable that an institution might subsequently judge that an obligor, at the time of the payment moratorium, probably would have been able to meet its payment obligations towards the institution in full. In practice, however, such an ex post assessment would not be possible, not least because of the IT requirements this would entail. This would also be of no practical value to the institution, since, for reasons of practicality, institutions base their risk management on their understanding of the obligor’s current situation. For this reason, the guidelines contain the following pragmatic rule: institutions assess whether a default has occurred within the meaning of Article 178 of the CRR or whether a forbearance measure has been adopted within the meaning of Article 47b of the CRR on the basis of the obligor’s payment obligations towards the institution as determined by the general payment moratorium (e.g. taking a postponement into consideration). (Margin nos. 13, 16)

In accordance with this objective of the guideline, the criteria under margin no. 10 of the guidelines are stipulated in such a way that individual solutions do not apply as part of a general payment moratorium. As such, it is specified under margin no. 10 b) that the “criteria for determining the scope of application of the moratorium should allow an obligor to take advantage of the moratorium without the assessment of its creditworthiness”.

BaFin’s administrative practice with regard to some specific scenarios is therefore as follows:

1. A necessary precondition for obligors to make use of a postponement under Article 240 section 3 (1) of the EGBGB is that the obligor suffers a loss of revenue due to the extraordinary circumstances which have arisen as a consequence of the spread of the COVID-19 pandemic which means that it is unreasonable to expect the consumer to make the contractually agreed payment. The obligor must demonstrate to the institution that they meet this precondition. The institution then reviews the plausibility of the information provided by the institution, where appropriate. The legal stipulations as regards the postponement period are exhaustive. The sentence stating that the postponement of payment as set out in sentence 1 of Article 240 section 3 (1) of the EGBGB is deemed not to apply provided obligors continue to make payments as contractually agreed makes it clear that it is solely the decision of the obligor whether they continue to make (partial) payments despite making use of the postponement. As such, the obligor alone may take the initiative to either apply the postponement or, equally, to make payments towards loans before the end of the postponement period. Although the institution may review the plausibility of the information provided by the obligor, it does not act on a case-by-case basis in a way that resembles a creditworthiness assessment. As such, postponements specified by the legislature in accordance with Article 240 section 3 (1) are regarded as legislative payment moratoria within the meaning of the EBA guidelines.
2. Where the parties concerned make arrangements which deviate from Article 240 section 3 (1) in accordance with Article 240 section 3 (2), it is to be assumed that the institution makes the arrangement with the obligor taking into consideration their specific economic circumstances, provided the deviating arrangement is not made within the scope of a non-legislative payment moratorium. Aside from this exception, a deviating arrangement in accordance with Article 240 section 3 (2) of the EGBEB is therefore not deemed to be made within the scope of a general payment moratorium.
3. Several institutions jointly communicate that every obligor within a large group may choose between various financial relief measures (e.g. postponement of principal payments for 9 months, or for shorter periods of time if the customer so wishes). This option granted to obligors is in line with the requirements of margin no. 10 (b) of the EBA/GL/2020/02 Guidelines and therefore also with the classification of such payment relief measures as general payment moratoria.
4. Several institutions jointly communicate to a large group of obligors a framework within which they are prepared to provide financial relief for the individual obligors (e.g. postponement of principal payments for up to 9 months). The decision regarding the specific financial relief measure does not fall solely to the obligor. It is to be assumed that an institution would gain an impression of the obligor’s specific economic circumstances before discussing with the obligor in question – to follow this example – the specific duration of a postponement. The specific arrangement regarding a postponement is therefore regarded as an individual agreement. A payment relief initiative which only provides a framework within which the institution and the obligor can make arrangements regarding financial relief is therefore not deemed to be a general payment moratorium.
5. Several institutions jointly communicate that a) each institution is to choose a specific offer from a common framework of similar offers for financial relief and b) the respective institution, within the framework of its specific offer, leaves the choice between the various financial relief measures solely to each individual obligor within a large group. This option granted to obligors is in line with the requirements of margin no. 10 (b) of the EBA/GL/2020/02 Guidelines and therefore also with the classification of such payment relief measures as general payment moratoria. For example: the institutions X and Y both provide notification of a payment relief initiative which provides for the postponement of principal payments for up to 12 months. Aside from the duration, the postponements take the same form. Institution X makes full use of the joint framework and offers postponements for up to 12 months. Institution Y only offers postponements for up to 9 months. Both institutions offer “similar payment relief measures” (margin no. 10 (a) of the EBA/GL/2020/02 Guidelines) within the framework of a joint general payment moratorium.

6. Several institutions effectively already participate in a general payment moratorium in accordance with margin no. 10 of the EBA/GL/2020/02 Guidelines before notifying this payment moratorium to BaFin and publicly communicating it. Effective participation in a payment moratorium that is later notified to BaFin and publicly communicated, including compliance with the additional requirements under margin no. 10 of the EBA/GL/2020/02 Guidelines, is based on relevant internal work instructions within the respective institution. Where payment relief measures are offered by an institution from the date on which corresponding internal work instructions are issued, such measures are to be regarded as granted within the framework of a general payment moratorium from the point in time when the relevant internal work instructions enter into force, as determined by the institution. For example: the institutions X and Y again both provide notification of a payment relief initiative which provides for the postponement of principal payments for up to 12 months. As before, aside from the duration, the postponements take the same form. Institution X makes full use of the common framework and offers postponements for up to 12 months from the point in time when notification of the initiative is provided. Institution Y only offers postponements for up to 9 months from the point in time when notification of the initiative is provided.
   Before providing notice of the payment relief initiative, institutions X and Y both offer the group of customers specified in the moratorium the following conditions according to their corresponding internal work instructions on a general basis (i.e. not as part of case-by-case solutions):

   a) Institution X offers postponements of up to 12 months, institution Y offers postponements of up to 9 months: all of the postponements offered by institutions X and Y on a general basis fall within the scope of the general payment moratorium, for which a joint notification is later submitted.
   b) Institution X offers postponements of up to 6 months, institution Y offers postponements of up to 12 months: all of the postponements offered by institution X fall within the scope of the general payment moratorium, for which a joint notification is later submitted. Institution Y, in contrast, only participates in the general payment moratorium following submission of the notification.

   The formal reason for the treatment described under b) is as follows: the postponement for 6 months offered by institution X can be deemed to fall within the scope of the payment relief initiative for which a joint notification is later submitted because, with the notification, institution X has merely extended the postponement periods. The postponement of 12 months offered by institution Y, however, does not fall within the scope of the payment relief initiative because, after submitting the notification, institution Y no longer offers postponements on a general basis of up to 12 months, but rather only up to 9 months.
   Practical implications: all postponements granted by institution X as part of its general postponement offer before it submitted the notification (= of up to 6 months) fall within the scope of the general payment moratorium. In contrast, none of the postponements granted by institution Y as part of its general postponement offer before it submitted the notification (= of up to 12 months) fall within the scope of the general payment moratorium. The postponements granted by institution Y before the notification will therefore be treated as postponements offered on a case-by-case basis. Even a postponement of only 6 months granted before the notification within the scope of a general offer for “postponements of up to 12 months” in line with the relevant work instructions does not fall within the scope of the general payment moratorium for which the notification is subsequently submitted.

The treatment described under b) is deemed necessary to avoid the indiscriminate inclusion of postponements in general payment moratoria for which notifications are subsequently submitted. However, if institution Y were to state in its notification that it offers postponements of up to 12 months, then all of the postponements it had granted on a general basis would fall within the scope of the moratorium. In other words: in order for the postponements granted by institution Y before the notification is submitted to be included in the scope of the general payment moratorium, institution Y must uphold the general offer as provided for by the internal work instructions after submission of the notification. This is deemed reasonable. Under a payment relief initiative, the obligor is not required to comply with covenants for the duration of the postponement. Margin no. 10 c) of the guidelines stipulates that: “... no other terms and conditions of the loans, such as the interest rate, should be changed.” Taken literally, it does not appear possible to apply this criterion since the impacts of a general payment moratorium on a contract cannot be anticipated in the contract itself. Rather, a general payment moratorium may result in a gap in the contract precisely because such a moratorium cannot provide for adjustments to individual contracts. Such gaps must be filled in the application of the contract. The suspension of covenants for the duration of the postponement is one option for this. This would not prevent the classification of a payment relief measure as a general payment moratorium.

An institution has offered several institutions guarantees for certain loans granted by these institutions. The institution is able to prompt these institutions to grant their obligors postponements for the repayment of loans subject to the guarantee. However, the guarantor institution requires that every obligor that has been granted a postponement for a loan subject to a guarantee is also offered a postponement for a loan not subject to a guarantee (if available) by the participating institutions. Through this arrangement, the postponement of a loan subject to a guarantee may prompt the creditor institution to begin negotiations with the obligor, on the basis of a creditworthiness assessment, regarding the details of such postponement of a loan that is not subject to a guarantee. This creditworthiness assessment is a consequence of the postponement of a loan subject to a guarantee; it is not a prerequisite for granting the postponement. The postponement of loans subject to a guarantee is therefore regarded as a non-legislative moratorium, provided the remaining requirements are met; the postponement of a loan not subject to a guarantee, in contrast, is regarded as an individual measure.

Institutions participating in a non-legislative payment moratorium must provide notification of this; for this purpose, they must ascertain the information specified under margin no. 17 of the EBA Guidelines. Institutions may give prior informal notice to BaFin and the Bundesbank that they are participating in the moratorium. This informal notice may also be given via the organiser of a payment moratorium, e.g. an industry association. The complete notification is to be submitted using the form entitled "Anzeige nach Absatz 17 der EBA-Leitlinien 2020/02" (notification in accordance with margin no. 17 of EBA Guidelines 2020/02 – no English translation available), which can be found under letter A on the linked page. The completed form must be submitted to the responsible division at BaFin and to the responsible Regional Office of the Deutsche Bundesbank, unless the notification is submitted jointly via the organiser of the moratorium. Institutions that have provided prior informal notice of their participation must additionally provide formal notification using this form.

Questions relating to antitrust law in connection with general payment moratoria do not fall under the scope of BaFin’s responsibility.