Under the auspices of the Finance Latvia Association, a number of banks have agreed to introduce standardised deferral of loan repayments in the light of the COVID–19 crisis. The moratoria, available to natural persons and businesses, were announced on 29 April and 5 May 2020, respectively.
Both moratoria are based on European Banking Authority’s guidelines which allow banks to address the short–term operational and liquidity challenges faced by borrowers, without incurring adverse consequences for capital adequacy. The benefit of the guidelines is available only if the deferral scheme covers the national banking industry or a material part of it. The purpose of these exceptional measures is to reduce the risk of an epidemiological crisis morphing into a financial contagion.
COBALT assisted in the drafting of the terms and conditions of the moratoria, and liaised with the Latvian competition authority to obtain backing for the process and outcome of negotiation. Partner Ugis Zeltins led the assignment.