More than 24,000 applications for the deferral of loan repayments; EUR 390 million in corporate liquidity loans approved

The economic recovery that began following the easing of the first wave of infections in May has lost momentum in recent weeks. The situation would have been significantly worse without a rapid and comprehensive economic policy response. As might be expected, these circumstances are being reflected in bank activities.

March saw the entry into force of a law allowing the deferral of borrowers’ loan repayments. The banks have received 24,622 applications from borrowers to date. Some three-quarters of the applications were submitted in the first month that the new law was in force, after which the number slowly stabilised in line with the situation. A law facilitating corporate lending backed by a government guarantee was adopted in April. A total of 23 loans backed by a government guarantee in the amount of EUR 30.9 million have been approved to date. It should be emphasised that the banks have approved 1,069 applications from firms for new liquidity loans in connection with the coronavirus during this period, with a total exposure of slightly less than EUR 390 million.

Due to the outbreak of the coronavirus and deteriorating economic situation, late March saw the entry into force of the Emergency Deferral of Borrowers’ Liabilities Act, which provides for the deferral of credit liabilities for firms, sole traders, cooperatives, farmers, and other individuals.

Banka Slovenije is monitoring the implementation of the aforementioned law and finds that the banks received the majority of applications for the deferral of credit liabilities during the law’s first month in force. The figures available up to 16 October indicate that the banks and savings banks received 24,622 applications for the deferral of repayments, and have already approved 85% of those applications. The vast majority of applications were received by the banks during the new law’s first month in force.

During this period, the banks were also lending to firms that needed liquidity loans in connection with Covid-19. They approved 1,069 applications for new liquidity loans in the total amount of EUR 387.3 million. Of that amount, 23 loans in the total amount of EUR 30.9 million were approved under the Act on Additional Liquidity to the Economy to Mitigate the Effects of the Covid-19 Epidemic, which facilitates corporate lending backed by a government guarantee. Banka Slovenije assesses that demand for corporate lending backed by a government guarantee will rise should the economic situation deteriorate in the coming months.