ECB supports the measures taken by euro area macro-prudential authorities to address the impact of COVID-19 outbreak on the financial sector. ECB has assessed the notifications submitted by national macro-prudential authorities for each proposed measure provided for in the Capital Requirements Regulation and Directive and has issued a non-objection decision endorsing these measures. The measures include releases or reductions of the countercyclical capital buffer, systemic risk buffer, and buffers for other systemically important institutions. In addition, some authorities have postponed or revoked earlier announced measures to avoid placing pressure on banks to accumulate capital buffers in a downturn.
The measures announced by national macro-prudential authorities since March 11, 2020 will free up more than EUR 20 billion of Common Equity Tier 1 capital held by euro area banks. These macro-prudential actions complement and reinforce the measures announced by ECB Banking Supervision since March 12, 2020. The following are the key developments in this area:
- Among the seven euro area countries with positive rates, authorities in France, Ireland, and Lithuania reduced the countercyclical capital buffer to 0% and those in Belgium and Germany revoked the previously announced countercyclical capital buffer activations. In turn, euro area banks have seen their requirements reduced by the countercyclical capital buffer reductions in Denmark, Hong Kong, Iceland, Norway, Sweden, and UK.
- The authorities in Estonia and Finland dropped the systemic risk buffer to 0% while the authority in the Netherlands reduced the existing 3% systemic risk buffer for three institutions.
- In combination with the reductions in the systemic risk buffer, Finland and the Netherlands also decided to lower the other systemically important institution buffer for one bank each. For the institutions in Finland this ensures that the combined structural buffers are effectively reduced by 1% of risk-weighted assets.
- Cyprus announced that it will delay the phase-in of other systemically important institution buffers by one year, while the Netherlands postponed the introduction of capital surcharges on domestic mortgage loan exposures under Article 458 of the Capital Requirements Regulation.
Keywords: Europe, EU, Banking, COVID-19, CCyB, SRB, O-SII, CRR/CRD, Systemic Risk, Basel III, Regulatory Capital, ECB
The Prudential Regulation Authority (PRA) published the final policy statement PS21/21 on the leverage ratio framework in the UK. PS21/21, which sets out the final policy of both the Financial Policy Committee (FPC) and PRA
The Consumer Financial Protection Bureau (CFPB) proposed to amend Regulation B to implement changes to the Equal Credit Opportunity Act (ECOA) under Section 1071 of the Dodd-Frank Act.
The Prudential Regulation Authority (PRA) decided to maintain, at the 2019 levels, the buffer rates for the Other Systemically Important Institutions (O-SII) for another year, with no new rates to be set until December 2023.
The Financial Stability Board (FSB) published a progress report on implementation of its high-level recommendations for the regulation, supervision, and oversight of global stablecoin arrangements.
In a letter to the authorized deposit taking institutions, the Australian Prudential Regulation Authority (APRA) announced an increase in the minimum interest rate buffer it expects banks to use when assessing the serviceability of home loan applications.
The Committee on Payments and Market Infrastructures (CPMI) and the International Organization of Securities Commissions (IOSCO) are consulting on the preliminary guidance that clarifies that stablecoin arrangements should observe international standards for payment, clearing, and settlement systems.
The European Banking Authority (EBA) and the European Insurance and Occupational Pensions Authority (EIOPA) have set out their respective work priorities for 2022.
The Malta Financial Services Authority (MFSA) updated the guidelines on supervisory reporting requirements under the reporting framework 3.0, in addition to the reporting module on leverage under the common reporting (COREP) framework.
The European Commission (EC) published the Implementing Decision 2021/1753 on the equivalence of supervisory and regulatory requirements of certain third countries and territories for the purposes of the treatment of exposures, in accordance with the Capital Requirements Regulation or CRR (575/2013).
EC published the Implementing Regulation 2021/1751, which lays down implementing technical standards on uniform formats and templates for notification of determination of the impracticability of including contractual recognition of write-down and conversion powers.