Bank of Italy extended the application of the recommendations on the dividend distribution and variable remuneration policies. Bank of Italy also issued clarifications on the expiration of the flexibility granted on compliance with capital and liquidity buffers during the COVID-19 pandemic.
Earlier, in March 2020, Bank of Italy published a Recommendation asking less significant banks not to pay dividends and to abstain from buyback of treasury shares up to October 01, 2020. Now, in line with the provisions of the ESRB Recommendation from May 27, 2020 and the ECB guidance for significant banks, Bank of Italy recommends the less significant banks to not pay dividends, or make any firm commitments to pay dividends, for 2019 and 2020 and to not proceed with the repurchase of shares. The central bank will assess the adequacy of the adopted policies within the annual supervisory review and evaluation process (SREP). It will continue to monitor the situation and will consider the opportunity for further communication on the distribution of dividends and variable remuneration policies after January 01, 2021.
In line with what was communicated by ECB, Bank of Italy continues to encourage banks and non-bank intermediaries under its supervision to use the assigned Target Component following the SREP process (Pillar 2 Guidance or P2G), the Capital Conservation buffer (CCB), and the Liquidity Coverage Ratio (LCR) to absorb losses in an orderly manner to encourage loans to families and businesses. The Bank of Italy will, therefore, not request the restoration of the capital buffers before the end 2022 and the LCR level before the end of 2021; these dates may be postponed, if necessary. If it should be deemed appropriate to increase the level of the Pillar 2 Guidance for some intermediaries, the necessary time to reach the new levels will be granted.
Related Link (in Italian): Press Release
Keywords: Europe, Italy, Banking, COVID-19, Dividend Distribution, Pillar 2 Guidance, SREP, Regulatory Capital, Liquidity Risk, LCR, CRR/CRD, Less Significant Institutions, Bank of Italy
Previous ArticleFED and FFIEC Offer Reporting Relief to Institutions Due to COVID-19
US Agencies (FDIC, FED, and OCC) finalized two rules, which are either identical or substantially similar to the interim final rules in effect and issued earlier this year.
EIOPA is consulting on a supervisory statement on the use of risk mitigation techniques by insurance and reinsurance undertakings.
APRA announced that it is resuming consultation on the confidentiality of data submitted to APRA by the authorized deposit-taking institutions.
BoE and FCA are supporting and encouraging liquidity providers in the sterling swaps market to adopt new quoting conventions for inter-dealer trading based on SONIA, instead of LIBOR, from October 27, 2020.
Deutsche Bundesbank published special schema files for securities holdings statistics (SHS), along with a document on the XML format description.
EC adopted a decision determining, for a limited period of time, that the regulatory framework applicable to central counterparties, or CCPs, in the UK and Northern Ireland is equivalent to the requirements laid down in the European Market Infrastructure Regulation (EMIR or Regulation 648/2012).
ESMA announced that it will recognize three central counterparties (CCPs) established in the UK as third-country CCPs, from January 01, 2021.
PRA published Version 02.04 of the PRA110 liquidity metric monitoring tool (PRA110 LMM tool).
FSB confirmed the Regulatory Oversight Committee (ROC) of the Global Legal Entity Identifier System (GLEIS) as the International Governance Body for the globally harmonized identifiers used to track over-the-counter (OTC) derivatives transactions, with effect from October 01, 2020.
FCA is consulting on its approach to the authorization and supervision of international firms operating in UK.