Moratoria end for thousands of companies

 In Banks, Moratoria, Mortgage lending, News

The moratoria or bank loan freezes for thousands of families and businesses ended today as customers will once again have to pay the principal and interest on their loans after an 18 month period of grace.

According to the latest data from the Bank of Portugal, a total of €36.8Bn in loans were covered by the moratoria designed to cushion businesses and mortgage-paying families against the worst effects of the pandemic.
The moratoria represented around 20% of the total credit portfolio in the Portuguese banking system or one in every five euros lent by banks.
In July around 290,000 private borrowers and companies were protected by the scheme which from today will have to start repaying their financial obligations.
The Portuguese decree-law of 26 March 2020 allowed bank customers to benefit from the suspension of capital and/or interest on loans for months.
The measure had already been subject to various alterations so as to extend the deadlines because of the various lockdowns imposed by the government over the 18 months that it took to bring the pandemic under control.
Specialised banks and credit institutions also introduced private moratoria regimes under the terms of the European Banking Authority (EBA), but the measures were progressively wound down and the sector managed to thereby avoid mass defaults.
Portugal was one of the European Union countries which most took advantage of the moratoria and the amount of aid that loans customers received concerned the authorities which feared a ticking time bomb that could explode the economy or cause a tidal wave of bankruptcies when they were withdrawn.
Both the Government and banks have ruled out such a scenario but do admit that there are companies that are still going through a tough time even though restrictions are now coming to an end and business is getting back to normal.
The sector that was hardest hit by the pandemic was hospitality, catering and retail trade which suffered more than other sectors of the economy. The Government launched a €1Bn State-backed credit line for loans covered by the moratoria which were restructured.
But banks and companies criticised the fact that there wasn’t a differentiated treatment for the restructuring of company loans under this scheme and which will now have their copybooks blotted in the financial system meaning they will be unable to get access to fresh financing for two years.