Banks do not have to automatically write off deferred loans to flood victims

Banks and savings banks can, in individual cases, defer loans to customers affected by the flood disaster. And you don’t have to write it off automatically either. The Federal Financial Supervisory Authority (BaFin) drew attention to this possibility on Thursday.

“The supervisory requirements give the banks sufficient room for maneuver that they can use in such a situation,” said BaFin Executive Director Raimund Röseler. It is about customers who are temporarily unable to service their loans because of the disaster.

BaFin promises supervision with a sense of proportion

Even after the outbreak of the corona pandemic, BaFin pointed out that banks can defer loans in individual cases under certain conditions without the debtor being deemed to have defaulted.

“As in the pandemic, we will continue to supervise with a sense of proportion after the flood disaster. Rules are not overridden, but used appropriately,” emphasized Röseler. Financial institutions actually have to take precautions for loans at risk of default, which has a negative impact on their results.

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