BDE has published two circulars (3/2020 and 2/2020) that amend Circular 4/2017 for credit institutions on public and confidential financial reporting rules. Circular 3/2020 introduces changes on the credit-risk classification of forborne exposures. Circular 2/2020 increases the reporting requirements of banks in respect of non-performing and forborne exposures and foreclosed collateral, supplements the information on operating and administrative expenses, and incorporates minor changes to the data to be reported on leases as a result of the entry into force of IFRS 16 on leases. The circulars will enter into force the day following their publication in the "Official State Gazette."
In response to COVID-19, Circular 3/2020 is intended to allow greater flexibility in applying expert judgment for the credit-risk classification of forborne exposures. Specifically, the new Circular allows rebuttal of the presumption that the granting of these loans would always result in a significant increase in credit risk. Banks may rebut this presumption and classify the loans as performing, if they consider that there has been no significant increase in credit risk, notwithstanding the requirement that they be identified as forborne exposures for their proper monitoring and risk management. This amendment allows the entities subject to Circular 4/2017 to make greater use of the flexibility in the EBA guidelines on the credit risk management practices of credit institutions and the accounting for expected credit losses (EBA/GL/2017/06).
Circular 2/2020 intends to incorporate changes related to the reporting requirements applicable to credit institutions, which were introduced by the Commission Implementing Regulation 2020/429 and ECB Regulation 2020/605. To comply with the ESRB recommendation on closing real estate data gaps, this circular introduces changes to the information required from credit institutions on (commercial and residential) real estate loans. Circular 2/2020 also incorporates the latest developments in IFRS and other standards adopted or approved by EU, simplifies certain reporting requirements for credit institutions, and updates the information required in the different financial statements.
Related Links (in English and Spanish)
Effective Date: Official Gazette+1 Day
Keywords: Europe, Spain, Banking, COVID-19, Credit Risk, Reporting, NPL, Forborne Exposures, Expected Credit Loss, IFRS 9, IFRS 16, Leases, EBA, ECB, ESRB, EC, BDE
Previous ArticleEBA Opinion on Treatment of Credit Insurance in Prudential Framework
BCBS is consulting on the principles for operational resilience and the revisions to the principles for sound management of operational risk for banks.
The Financial Stability Institute (FSI) of BIS published a brief note that examines the supervisory challenges associated with certain temporary regulatory relief measures introduced by BCBS and prudential authorities in response to the COVID-19 pandemic.
HKMA, together with the Banking Sector Small and Medium-Size Enterprise (SME) Lending Coordination Mechanism, announced a ninety-day repayment deferment for trade facilities under the Pre-approved Principal Payment Holiday Scheme.
The Advisory Scientific Committee of ESRB published a response, in the form of an Insights Paper, to the EBA proposals for reforms to the stress testing framework in EU.
MAS announced several initiatives to support adoption of the Singapore Overnight Rate Average (SORA), which is administered by MAS.
BoE updated the reporting template for Form ER as well as the Form ER definitions, which contain guidance on the methodology to be used in calculating annualized interest rates.
PRA published the policy statement PS19/20 on the final policy for extending coverage under the Financial Services Compensation Scheme (FSCS) for Temporary High Balance.
EBA published the final draft implementing technical standards for disclosures and reporting on the minimum requirements for own funds and eligible liabilities (MREL) and the total loss-absorbing capacity (TLAC) requirements in EU.
EBA published an erratum for the phase 2 of technical package on the reporting framework 2.10.
EC published the Implementing Regulation 2020/1145, which lays down technical information for calculation of technical provisions and basic own funds.