TAP debt will not affect bank NPEs

 In Aviation, News, TAP

Portuguese national airline TAP has made an agreement with several banks to postpone payments of its debts beyond the end of the moratoria period in September this year.

Furthermore, the State’s restructuring of the airline will not be classified as Non-Performing Exposure, which result from Non-Performing Loans, so it will not affect bank credit ratios according to Jornal Económico.
A document delivered to the Portuguese parliament states that banks owed money “have agreed to postpone the repayment dates by around 18 months to avoid significant increases in payments after the moratoria.”
This postponement of debt payment (capital and interest) to the banks was a manner found by TAP to reduce the impacts of the pandemic.
Under normal circumstances, a postponement of this type should be considered as restructuring out of financial necessity, creating NPEs for the banks, since moratoria on bank loans granted on the back of the regulatory framework of the European Banking Authority (EBA) do not automatically lead to a reclassification as a restructured loan.