CBK Offers Regulatory Stimulus Package for Banks Amid COVID-19 Crisis
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.
Related Links
- 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
Featured Experts
María Cañamero
Skilled market researcher; growth strategist; successful go-to-market campaign developer
Nicolas Degruson
Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.
Victor Calanog, Ph.D.
Leading economist; commercial real estate; performance forecasting, econometric infrastructure; data modeling; credit risk modeling; portfolio assessment; custom commercial real estate analysis; thought leader.
Previous Article
HKMA Postpones Stress Test for Banks Amid COVID-19 OutbreakRelated Articles
EC Issues Regulation on Adjustments to K-Factor Coefficients Under IFR
The European Commission (EC) published a report summarizing responses to the targeted consultation on the supervisory convergence and the single rulebook in the European Union (EU).
OSFI Issues Results of Pilot on Climate Risk Scenario Analysis
The Office of the Superintendent of Financial Institutions (OSFI) published an update on the discussion paper that intended to engage federally regulated financial institutions and other interested stakeholders in a dialog with OSFI, to proactively enhance and align assurance expectations over key regulatory returns.
ECB Issues Opinions on Green Bonds Standard and CRR Proposals
The European Central Bank (ECB) published its opinion on a proposal for a regulation on European green bonds, following a request from the European Parliament.
ESRB Explores Policy Response to Risks Arising from Digitalization
The Advisory Scientific Committee (ASC) of the European Systemic Risk Board (ESRB) published a report that explores the expected impact of digitalization on provision of financial and banking services, and proposes policy measures to address the risks stemming from digitalization.
EU Authorities Address COVID-19 Reporting, MCD, and PSD2 Issues
The European Banking Authority (EBA) announced that the guidelines on the reporting and disclosure of exposures subject to measures COVID-relief measures shall continue to apply until further notice.
FI Publishes Multiple Regulatory and Reporting Updates
The Swedish Financial Supervisory Authority (FI) announced that the capital adequacy reporting as at December 31, 2021 must be done by February 11, 2022.
BSP Tackles Aspects of Lending and Islamic, Open & Sustainable Finance
The Central Bank of the Philippines (BSP) issued communications covering developments related to online lending platforms, open finance framework and roadmap, and on the expected regulations in the area sustainable finance.
US Agencies Issue Regulatory Updates, FDIC Launches Tech Sprint
The Board of Governors of the Federal Reserve System (FED) published the final rule that amends Regulation I to reduce the quarterly reporting burden for member banks by automating the application process for adjusting their subscriptions to the Federal Reserve Bank capital stock, except in the context of mergers.
EBA Issues Guide on Bank Resolvability, Consults on Transferability
The European Banking Authority (EBA) published its assessment of risks through the quarterly Risk Dashboard and the results of the Autumn edition of the Risk Assessment Questionnaire (RAQ).
MFSA Publishes CRD5 Updates and Supervisory Priorities for 2022
The Malta Financial Services Authority (MFSA) updated the guidelines on supervisory reporting requirements under the reporting framework 3.0.
