CBK announced adjustments to certain regulations and macro-prudential policy tools to empower banks to address challenges posed by the outbreak of COVID-19. To this end, CBK eased certain capital and liquidity requirements to support bank lending. CBK also notified that Moody's Investors Service placed Kuwait's Aa2 long-term issuer rating on a review for downgrade. CBK also published information on the funding mechanism for finance being extended to the individuals, the small and medium-size enterprises, and the economic entities negatively affected by the COVID-19 outbreak.
The recent regulatory instructions are a part of the previous actions taken to support vital economic sectors and enterprises with added value to the local economy and to support people and small and medium enterprises and businesses that are negatively affected by the current circumstances. In terms of liquidity, CBK eased certain requirements associated with the liquidity coverage ratio, the net stable funding ratio, and the regulatory liquidity ratio, also increasing the maximum limits for the negative cumulative mismatch and the maximum lending limits to providing financing. Furthermore, to provide more support to small and medium enterprises, the credit risk weight for the calculation of the capital adequacy ratio is being reduced from 75% to 25%. CBK is also allowing banks to release the capital conservation buffers, thus reducing capital requirements. On financing for private housing and development, the new instructions included increasing the ratio of loans-to-value of the property or the cost of development.
- Press Release on COVID-19 Measures
- Press Release on Rating Downgrade
- Announcement on Funding Mechanism
- Funding Mechanism (PDF in Arabic)
Keywords: Middle East and Africa, Kuwait, Banking, COVID-19, Capital Conservation Buffer, Capital Conservation Buffer, Capital Requirements, SME, Funding Mechanism, Credit Risk, Macro-Prudential Policy, Liquidity Risk, Regulatory Capital, CBK
Leading economist; commercial real estate; performance forecasting, econometric infrastructure; data modeling; credit risk modeling; portfolio assessment; custom commercial real estate analysis; thought leader.
Previous ArticleHKMA Postpones Stress Test for Banks Amid COVID-19 Outbreak
ECB published Guideline 2021/975, which amends Guideline ECB/2014/31, on the additional temporary measures relating to Eurosystem refinancing operations and eligibility of collateral.
EIOPA published a report, from the Consultative Expert Group on Digital Ethics, that sets out artificial intelligence governance principles for an ethical and trustworthy artificial intelligence in the insurance sector in EU.
HKMA published the seventh and final issue of the Regtech Watch series, which outlines the three-year roadmap of HKMA to integrate supervisory technology, or suptech, into its processes.
EC launched a targeted consultation to improve transparency and efficiency in the secondary markets for nonperforming loans (NPLs).
BIS, Danmarks Nationalbank, Central Bank of Iceland, Norges Bank, and Sveriges Riksbank launched an Innovation Hub in Stockholm, making this the fifth BIS Innovation Hub Center to be opened in the past two years.
FDITECH, the technology lab of FDIC, announced a tech sprint that is designed to explore new technologies and techniques that would help expand the capabilities of community banks to meet the needs of unbanked individuals and households.
EC released the EU Taxonomy Compass, which visually represents the contents of the EU Taxonomy starting with the EU Taxonomy Climate Delegated Act.
FDIC is seeking comments on a rule to amend the interagency guidelines for real estate lending policies—also known as the Real Estate Lending Standards.
EIOPA published its annual report, which sets out the work done in 2020 and indicates the planned work areas for the coming months.
The ESRB paper that presents an analytical framework that assesses and quantifies the potential impact of a bank failure on the real economy through the lending function.