No new moratorium on bank lending foreseen

During the first lockdown in 2020, the country’s main banks granted a temporary moratorium on their credit repayments to SMEs, self-employed workers and certain individuals. As the crisis drags on, however, there are no plans to reactivate such a measure.

The moratorium came as a life-preserving reprieve for many, the aim being to allow the beneficiaries to “restart their activity on a sound economic basis as soon as the crisis is over”.

The measure has been successful, as “Luxembourg credit institutions granted a moratorium of up to six months of payment deferral on some 18,000 loans,” says Mars Di BartolomeoMars Di Bartolomeo (LSAP) as part of a parliamentary question posed together with his colleague Claude HaagenClaude Haagen (LSAP). The idea was to find out how the health crisis affected credit repayment times, especially as the moratoria disappeared in the course of 2020.

Delays of up to 1.5% of outstanding loans

In his response, finance minister Pierre GramegnaPierre Gramegna (DP) indicated that “for Luxembourg banks active on the domestic market the ratio of loans to individuals with payment delays was, at the end of March 2021, 1.5% of their outstanding loans. As with loans in arrears, the level of outstanding loans undergoing restructuring has also remained relatively stable since September 2020.”

The minister could not, of course, provide information on how moratorium applications are currently being processed. This is “a matter for the commercial policy of each of the banks concerned”.

In any case, there are currently no plans to reintroduce a moratorium that would affect all the banks in the market, “given the extent of the economic recovery on the one hand, and the renewal of direct aid to support the economic sectors most affected by the health crisis on the other”. Moreover, concludes Gramegna, “the European Banking Authority no longer foresees the application of a preferential prudential regime for moratoria linked to the covid-19 crisis.”