The European Banking Authority (EBA) said that, due to the second wave of COVID-19 infections, guidance for banks that expired on Sept. 30 was being reactivated until March 31, 2021.
As the first set of lockdowns from March closed businesses, banks began granting payment holidays on company loans, mortgages and other types of credit.
Loans totalling 871 billion euros ($1.05 trillion) had benefited from the relief measures by June.
Without guidance originally introduced by EBA in April, banks would have been required to start automatically provisioning for loans not being repaid 90 days after the due date, making them less likely to keep lending to the COVID-hit economy.
Loans could only benefit from a repayment holiday for nine months in total and banks must spell out plans for assessing whether loans subject to payment holiday were likely to default, EBA said.
Union, European Banking Authority, EBA