EBA - Clarification on the application of the prudential framework in light of COVID 19 measures

The EBA calls for flexibility and pragmatism in the application of the prudential framework and clarifies that, in case of debt moratoria, there is no automatic classification in default, forborne, or IFRS9 status.

The EBA, nonetheless, insists on the importance of adequate risk measurement and expects institutions to prioritise individual assessments of obligors’ likeliness to pay when possible.

Consumer protection remains a priority and financial institutions should ensure full disclosure and act in the interest of customers, with no hidden charges or automatic impact on credit ratings.

Well-functioning payment services are vital at this time, and contactless payments should be stepped up to the threshold allowed under EU law.