23,700 applications for borrowers’ moratorium at banks in first three months

Banka Slovenije can report that during the first three months of the law being in force, banks received 23,700 applications from borrowers for a moratorium on repayments, equivalent to 3.6% of total loans. The vast majority of applications, fully three-quarters, were received by banks during the law’s first month in force. We can also report that banks have already processed over 91% of the applications received, the vast majority of which have been approved.

The end of March saw the entry into force of the Emergency Deferral of Borrowers’ Liabilities Act (the ZIUOPOK). The law provides for a moratorium on credit liabilities for firms, sole traders, cooperatives, farmers, and other individuals. Previously an option that could be agreed between bank and borrower, loan restructuring has been made mandatory by the law. The option is temporary, and applies to all those who find themselves in difficulties caused by the outbreak of the crisis.

Banka Slovenije is monitoring the implementation of the law. The figures available after the third month of the law being in force reveal that banks and savings banks received 23,705 applications for a moratorium on repayments. The vast majority of applications, fully three-quarters, were received by banks during the law’s first month in force. In June most applications for moratoria (almost 1,800) came from households.

Figure 1: Number of applications received and total amount of liabilities deferred, end of June 2020

Source: Reports on deferrals received from banks

We can also report that the applications for a moratorium on repayments cover 3.6% of the total number of loans that borrowers hold with banks. Moratorium applications were submitted for 3.1% of the total number of household loans, and for 5.6% of the total number of corporate loans.

Banka Slovenije can also clarify that the EUR 401.1 million of deferred repayments, which is the total amount of deferred liabilities according to the latest figures, is in essence cashflow that the banks will not receive during the moratorium period; it will be received later, in the years after the end of the moratorium.

We can also report that banks have already processed over 90% of the applications received, the vast majority of which (almost 90%) have been approved. This is attributable to the fall in the number of applications received in the last two months, and also to more effective IT support being put in place at banks for processing applications.