Featured Product

    EC Adopts Banking Package to Alleviate Impact of COVID-19 Pandemic

    April 28, 2020

    EC adopted a banking package to help facilitate bank lending to households and businesses in EU, amid the COVID-19 pandemic. The banking package includes an Interpretative Communication on the accounting and prudential frameworks in EU as well as a proposal to amend the Capital Requirements Regulations, CRR and CRR2 (EU 575/2013 and 2019/876). The proposal implements certain targeted changes to maximize the capacity of credit institutions to lend and to absorb losses related to the COVID-19 pandemic. EC also published remarks by the Executive Vice-President Valdis Dombrovskis and a set of frequently asked questions (FAQs) on the banking package.

    Proposal to Amend CRR and CRR2

    As part of the targeted amendments to CRR and CRR2, EC proposed exceptional temporary measures to alleviate the immediate impact of COVID-19-related developments, including the following:

    • Transitional arrangements for mitigating the impact of IFRS 9 provisions on regulatory capital—The proposal includes adjusting the transitional arrangements that allow credit institutions to alleviate the impact from expected credit-loss (ECL) provisioning under IFRS 9 on their own funds. This adjustment would allow credit institutions to better mitigate the impact of any potential increase in ECL provisioning caused by the deterioration in the credit quality of credit institutions’ exposures due to the economic consequences of the COVID-19 pandemic. 
    • Treatment of publicly guaranteed loans under the nonperforming loan (NPL) prudential backstop—NPLs guaranteed by official export credit agencies receive a preferential treatment regarding provisioning requirements under Article 47c of the CRR. The proposed derogation from Article 47c(3) extends this preferential treatment to exposures guaranteed or counter-guaranteed by the public sector in the context of measures aimed at mitigating the economic impact of the COVID-19 pandemic, subject to Union State aid rules, where applicable.
    • Date of application of the leverage ratio buffer—In the context of the COVID-19 pandemic and in line with the revised implementation timeline agreed by BCBS, the application date of the new leverage ratio buffer requirement, set in Article 3(5) of CRR2, has been deferred by one year, to January 01, 2023.
    • Offsetting the impact of excluding certain exposures from the calculation of the leverage ratio—The offsetting mechanism associated with the competent authority discretion to allow credit institutions to temporarily exclude exposures in the form of central bank reserves from the calculation of the leverage ratio has been modified. This would ensure that liquidity measures provided by central banks in a crisis context would be effectively channeled by credit institutions to the economy.

    EC also proposed to advance the date of application of several agreed measures that incentivize banks to finance employees, small and medium-sized enterprises (SMEs), and infrastructure projects. The proposed changes will not fundamentally alter the prudential regulatory framework. They form a part of the response of EC to address the emergency situation triggered by the COVID-19 pandemic.

    Interpretative Communication

    The Interpretative Communication confirms the recent statements on using flexibility within accounting and prudential rules, such as those made by BCBS, EBA, and ECB. Within this communication, EC encourages banks and supervisory authorities to make use of flexibility in the accounting and prudential frameworks in EU. For instance, the communication confirms, and welcomes, the flexibility available in EU rules when it comes to public and private moratoria on loan repayments (EBA guidelines of April 02). The communication also highlights areas in which banks are invited to act responsibly, for example, by refraining from making dividend distributions to shareholders or adopting a conservative approach to the payment of variable remuneration. Going forward, EC will further engage with the European financial sector on its role in the fight against the COVID-19 and its socioeconomic impact and the support of a sustainable economic recovery. 


    Related Links

    Keywords: Europe, EU, Banking, COVID-19, CRR, Basel III, Leverage Ratio, SME, FAQ, IFRS 9, ECL, Non-Performing Loans, ECL, EBA, ECB, EC

    Featured Experts
    Related Articles

    EBA Publishes Final Regulatory Standards on STS Securitizations

    The European Banking Authority (EBA) published the final draft regulatory technical standards specifying and, where relevant, calibrating the minimum performance-related triggers for simple.

    September 20, 2022 WebPage Regulatory News

    ECB Further Reviews Costs and Benefits Associated with IReF

    The European Central Bank (ECB) is undertaking the integrated reporting framework (IReF) project to integrate statistical requirements for banks into a standardized reporting framework that would be applicable across the euro area and adopted by authorities in other EU member states.

    September 15, 2022 WebPage Regulatory News

    EBA Publishes Funding Plans Report, Receives EMAS Certification

    The European Banking Authority (EBA) has been awarded the top European Standard for its environmental performance under the European Eco-Management and Audit Scheme (EMAS).

    September 15, 2022 WebPage Regulatory News

    MAS Launches SaaS Solution to Simplify Listed Entity ESG Disclosures

    The Monetary Authority of Singapore (MAS) set out the Financial Services Industry Transformation Map 2025 and, in collaboration with the SGX Group, launched ESGenome.

    September 15, 2022 WebPage Regulatory News

    BCBS to Finalize Crypto Rules by End-2022; US to Propose Basel 3 Rules

    The Basel Committee on Banking Supervision met, shortly after a gathering of the Group of Central Bank Governors and Heads of Supervision (GHOS), the oversight body of BCBS.

    September 15, 2022 WebPage Regulatory News

    IOSCO Welcomes Work on Sustainability-Related Corporate Reporting

    The International Organization of Securities Commissions (IOSCO) welcomed the work of the international audit and assurance standard setters—the International Auditing and Assurance Standards Board (IAASB)

    September 15, 2022 WebPage Regulatory News

    BoE Allows One-Day Delay in Statistical Data Submissions by Banks

    The Bank of England (BoE) published a Statistical Notice (2022/18), which informs that due to the Bank Holiday granted for Her Majesty Queen Elizabeth II’s State Funeral on Monday September 19, 2022.

    September 14, 2022 WebPage Regulatory News

    ACPR Amends Reporting Module Timelines Under EBA Framework 3.2

    The French Prudential Control and Resolution Authority (ACPR) announced that the European Banking Authority (EBA) has updated its filing rules and the implementation dates for certain modules of the EBA reporting framework 3.2.

    September 14, 2022 WebPage Regulatory News

    ECB Paper Discusses Disclosure of Climate Risks by Credit Agencies

    The European Central Bank (ECB) published a paper that examines how credit rating agencies accepted by the Eurosystem, as part of the Eurosystem Credit Assessment Framework (ECAF)

    September 13, 2022 WebPage Regulatory News

    APRA to Modernize Prudential Architecture, Reduces Liquidity Facility

    The Australian Prudential Regulation Authority (APRA) announced reduction in the aggregate Committed Liquidity Facility (CLF) for authorized deposit-taking entities to ~USD 33 billion on September 01, 2022.

    September 12, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8514