Details Of Italian Lending Moratorium Emerge

by Ulrika Lomas, Tax-News.com, Brussels

06 August 2009

Italy’s Ministry of the Economy, the Association of Italian Banks and other interested industrial and commercial bodies have come together to arrange a moratorium on repayments of bank loans by small and medium-sized Italian companies.

There will be a moratorium, for a period of 12 months, on capital repayments due on medium-term loans and mortgages. There will also be a extension of 270 days on the due date of short-term loans and overdrafts. Interest and fees will still need to be paid on time.

To benefit from the moratorium, companies should have not more than 250 employees and an annual turnover not greater than EUR50m (or total assets of up to EUR43m). In addition, a company will need to have “good economic prospects”, and to have had no overdue debts with its bank as at 30 September 2008.

However, for the moratorium to be in effect for its customers, each Italian bank will need to sign the moratorium agreement, at which point customers of such a signatory bank can make their requests for inclusion, within the period up to 30 June 2010. Obviously, it is hoped that the majority of banks will sign up, and it is expected that a lot of moral suasion will be brought to bear.

The Minister of the Economy, Giulio Tremonti, has promised to look at the fiscal treatment of any subsequent losses to the banks at a later stage, when and if the banks sign up to the documentation.

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