Cypriots are among Europe’s privileged borrowers, Phileleftheros’ Insider reports, as they are entitled to nine months of suspension of loan payments (principal as well as interest) that was also enshrined into law, a benefit not enjoyed by many other member-states.
According to data gathered by the portal, loan suspension in the Cypriot banking system covers all categories of borrowers and loans, while many European banking systems exclude principal payments from their support package and only assist with interest. Moreover, in some countries, there is no law holding banks accountable but it is instead left to banks’ goodwill to help.
In the aftermath of the Coronavirus blow to the real economy, nearly all European banking systems have put relaxations in place for the repayment of loans.
Austria has upheld a law that suspends payments of principal but not interest for three months.
Similarly, borrowers in Belgium are entitled to a moratorium on principal payments for six months while continuing to pay the interest.
The Czech Republic allows borrowers by law to select a suspension on principal payments for a period between three and six months and the relevant applications cannot be submitted after October 31, 2020. Like with Austria and Belgium, interest payments are excluded from the arrangement.
In Estonia there is no law backing loan moratoriums but borrowers have the option to suspend principal payments from six to 12 months and must continue paying the interest.
Similarly in Finland, no law has been put in place for loan payment suspensions but borrowers have the option to halt payments from three to 12 months and only pay the interest.
France has a six-month loan moratorium in place, Germany for three months with the relevant legislation in place.
In Greece the moratorium is for three months and concerns those who have joined the scheme of primary home protection or the mechanism for the out-of-court arrangement of business debt. However, the government’s decision will only apply to natural persons entitled to an 800 euro emergency allowance as well as businesses adversely hit by the pandemic lockout.
Borrowers in Hungary are also among the privileged with a law in place that enforces the freezing of both principal and interest payments until the end of the year.
Ireland’s moratorium lasts from three to six months but there is no legislation in place.
In Italy loan payment suspensions are enshrined into law and last from six to 18 months depending on the type of loan.
Latvia’s banking system allows for moratoriums lasting from six to 12 months as per the loan category but no law is in place.
Lithuania too has no relevant legislation but allows for a suspension of principal payments only from six to 12 months.
The loan moratorium in Portugal will be in place until September 30, while in Spain it lasts from three to six months and in certain cases it can go up to 12 months.