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PARIS: European firms made considerable use of facilities to put off loan payments during the first months of the Covid-19 crisis, delaying payment on nearly 900 billion euros of loans, according to the European Banking Authority. As of June, a total of 871 billion euros ($1.0 trillion) in loans were concerned by a payment moratorium, about 6 percent of the total, according to a study conducted by the EBA.

Sixteen percent of loans to small and medium-sized businesses were in a payment moratorium, 12 percent of those given to commercial real estate firms and 7 percent for housing loans.

The EBA said that repayment moratoria were one type of measures EU countries adopted "in order to mitigate the immediate impact of the sudden freeze in economic activity, support new lending and provide breathing space to borrowers" as coronavirus lockdowns were imposed.

If the details vary by country and bank, a payment moratorium gives a borrower a chance to temporarily suspend or delay loan repayments. "The use of moratoria was widely dispersed across countries and banks, with a few banks reporting that almost 50 percent of their total loans to non-financial companies and households were subject to moratoria," said the EBA.

Cypriot, Hungarian and Portuguese banks had the highest proportion of loans subject to moratoria.

"Loans under moratoria are likely associated with increased credit risk," warned the EBA, one of the EU's financial regulatory and supervisory bodies.