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    CBK Offers Regulatory Stimulus Package for Banks Amid COVID-19 Crisis

    April 21, 2020

    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. 

     

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    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

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