CMF Extends Treatment of Provisions for Loan Rescheduling Amid Crisis
CMF decided to extend, until August 31, 2020, part of the temporary measures for the treatment of credit risk provisions applicable to banks and supervised savings and credit cooperatives. CMF had announced these measures in April 2020 to ease the impact of COVID-19 outbreak and these measures had been scheduled to expire on July 31, 2020. CMF also published a report on the performance of supervised banks and cooperatives as of June 2020. In addition to the usual information, the performance report includes a review of the COVID-19 guaranteed loans granted under Guarantee Fund for Small Entrepreneurs (FOGAPE) at the end of the first half of 2020.
The temporary measures that were announced to ease the impact of COVID-19 outbreak allow banks and cooperatives not to consider increased provisions for loan installments that are rescheduled under this special treatment. The one-month extension on this treatment will apply to housing and commercial loans. The aim of the measures is to facilitate loan rescheduling for debtors that have been affected by the COVID-19 pandemic, but still have the capacity to pay in the future. This special treatment provided by CMF does not relieve financial institutions of the responsibility to conduct an adequate assessment of their credit and liquidity risk management, which is necessary to avoid compromising the financial strength.
Related Links
Keywords: Americas, Chile, Banking, COVID-19, Credit Risk, Liquidity Risk, Payment Deferrals, Loan Moratorium, Loan Guarantee, FOGAPE, CMF
Featured Experts
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
BoE Supports Central Banks in Africa and Asia to Manage COVID ShockRelated Articles
HKMA Finalizes Policy Modules on Group-Wide Approach and Remuneration
The Hong Kong Monetary Authority (HKMA) revised the Supervisory Policy Manual module CG-5 that sets out guidelines on a sound remuneration system for authorized institutions.
EBA Guide to Monitor Threshold for Intermediate Parent Undertakings
The European Banking Authority (EBA) published the final guidelines on the monitoring of the threshold and other procedural aspects on the establishment of intermediate parent undertakings in European Union (EU), as laid down in the Capital Requirements Directive (CRD).
PRA Finalizes Approach to Supervision of International Banks
In a recent Market Notice, the Bank of England (BoE) confirmed that green gilts will have equivalent eligibility to existing gilts in its market operations.
FCA Issues PS21/9 on Implementation of Investment Firms Regime
The Financial Conduct Authority (FCA) published the policy statement PS21/9 on implementation of the Investment Firms Prudential Regime.
EBA Proposes Regulatory Standards to Identify Shadow Banking Entities
The European Banking Authority (EBA) proposed regulatory technical standards that set out criteria for identifying shadow banking entities for the purpose of reporting large exposures.
IOSCO Proposes Recommendations on ESG Ratings and Data Providers
The Board of the International Organization of Securities Commissions (IOSCO) proposed a set of recommendations on the environmental, social, and governance (ESG) ratings and data providers.
ESMA Group Issues Recommendations on RFR Switch in Interdealer Market
The European Securities and Markets Authority (ESMA) published recommendations from the Working Group on Euro Risk-Free Rates (RFR) on the switch to risk-free rates in the interdealer market.
ECB Study Assesses Impact of Basel III Finalization Package
The European Central Bank (ECB) published a paper as well as an article in the July Macroprudential Bulletin, both of which offer insights on the assessment of the impact of Basel III finalization package on the euro area.
ISDA Finds FRTB Results in Higher Capital Charges for Carbon Trading
The International Swaps and Derivatives Association (ISDA) published a paper that explores the impact of the Fundamental Review of the Trading Book (FRTB) on the trading of carbon certificates.
PRA Updates Remuneration Policy Statement Templates and Tables
The Prudential Regulation Authority (PRA) published the remuneration policy self-assessment templates and tables on strengthening accountability.
