In support of the clients – legal entities of AS “PrivatBank” with short-term deterioration in financial condition resulting from COVID-19 pandemic, the Bank joins the moratorium developed by the Finance Latvia Association.
The moratorium applies to legal persons and other entities involved in economic activity, except self- employed individuals. The moratorium will change the repayment schedule of the principal if the loan agreement stipulates the repayment of the principal in installments. According to the client’s request, the repayment of the principal is partially or fully deferred for the term of up to six months as it is stipulated in the moratorium. During this deferral term, the client must continue to pay interest, insurance premiums and other payments stated in the loan agreement which are not the principal. Financial institutions may not ask for additional collateral or increase the interest rate.
Clients can defer their principal repayments in accordance with the terms of the moratorium once. If the client got loan repayment relief between March 12th, 2020 and the day the moratorium comes into force, the financial institution has the right to change this in accordance with the moratorium per the client’s request. Commission fees for processing the moratorium only apply for the amount needed to prepare documentation for the agreement amendment.
The moratorium stipulates that businesses may defer the repayment of principal if they were not in financial difficulties before March 12th, 2020, or if there are no insurmountable obstacles in repaying the loan.
A business can apply for the use of the moratorium if the company’s own capital was positive at the end of the previous financial year, and if loan repayments were not overdue for more than 30 days within the past year from March 12th, 2019. The client must state the reason, linked with COVID-19, for its worsened financial circumstances to its servicing financial institution.
The moratorium does not apply to businesses whose main business is gambling. The moratorium will also not be applied to businesses which are insolvent, bankrupt or who have gone into administration. It will also not be applied to businesses with whom relations have been terminated in accordance with prevention of money laundering and terrorism and proliferation financing laws or international targeted financial sanctions.
The moratorium comes into force on May 5th, 2020, and remains in force until the Association issues notification of its ending. Clients must apply for deferral of principal repayment by June 12th, 2020, and the financial institution must make a decision by June 30th, 2020.