FIN-FSA confirms, in line with the decisions taken by ECB, that banks are temporarily exempt from fulfilling certain additional capital and liquidity requirements, in response to coronavirus (COVID-19) pandemic. This will enhance the ability of credit institutions to provide funding to non-financial corporations and households and will alleviate the negative economic effects of the pandemic. The FIN-FSA Board has started work on an immediate review of the level of capital requirements that are subject to national decision-making. FIN-FSA continues to monitor the situation and banks’ contingency measures to address possible effects of the coronavirus on the domestic banking sector.
ECB and EBA, on March 12, 2020, had decided on several measures to facilitate lending by banks. ECB announced measures that provide the directly supervised (by ECB) banks with flexibility in the fulfillment of certain additional capital and liquidity requirements. These measures aim to support banks in addressing market uncertainty related to the COVID-19 and in continuing to fulfill their role in funding the real economy. Of the credit institutions operating in Finland, the entities directly supervised by ECB are Nordea Bank Abp, OP Financial Group, and Municipality Finance Plc. FIN-FSA points out that the own funds that Finnish banks under the direct supervision of ECB or FIN-FSA can use to fulfill the Pillar 2 additional capital requirement are, however, provided by law. The other measures provided by ECB are also available to banks directly supervised by the FIN-FSA, if necessary.
In addition, EBA wants to let banks to focus on and ensure continuity of their core operations and has decided to postpone the EU-wide stress test exercise until 2021. In line with this decision by EBA, FIN-FSA has also decided to postpone to 2021 the stress test exercise for banks under its direct supervision. Additionally, FIN-FSA has taken contingency measures in view of the corona virus to ensure the safety and well-being of staff members and the continuity of the FIN-FSA operations. FIN-FSA is also closely monitoring the situation on the financial markets and in supervised entities in cooperation with other Finnish authorities and European supervisors. The corona virus situation at the FIN-FSA is being monitored and procedures coordinated in a joint group together with the Bank of Finland.
Keywords: Europe, EU, Finland, Banking, Stress Testing, COVID 19, Capital Requirements, Liquidity Requirements, Pillar 2, ECB, EBA, FIN-FSA
Previous ArticleFIN-FSA Outlines Focus Areas and Publishes Annual Report for 2019
The Bank of England (BoE) published the Statistical Notice 2021/09 requiring additional information from firms and software vendors to assist in the onboarding and testing phases for migrating statistical reporting to the BEEDS portal.
The Financial Conduct Authority (FCA) published the final rules on the Investment Firms Prudential Regime (IFPR) to streamline and simplify the prudential requirements for solo-regulated UK firms authorized under the Markets in Financial Instruments Directive (MiFID).
The European Banking Authority (EBA) published the final draft regulatory technical standards on gross jump-to-default amounts and on residual risk add-on under the Capital Requirements Regulation or CRR.
The working groups of the Climate Financial Risk Forum (CFRF) published a second round of guides (or Session 2 guides), written by the industry for the industry, to help financial firms manage climate-related financial risks.
The Prudential Regulation Authority (PRA) published the final Policy Statement PS24/21 that contains the new Non-Performing Exposures Securitization Part of the PRA Rulebook and an updated Supervisory Statement SS10/18 on the general requirements and capital framework with respect to securitizations.
The Bank for International Settlements (BIS) announced the development of an Asian Green Bond Fund, in collaboration with the development financing community, to channel global central bank reserves to green projects in Asia Pacific.
The Financial Stability Oversight Council (FSOC) released a report in response to the U.S. President's Executive Order on climate-related financial risk.
The Bank for International Settlements (BIS) published a paper that examines the business models and the associated risks posed by big technology firms foraying into financial services sector.
The European Banking Authority (EBA) published version 5.1 of the filing rules for supervisory reporting.
The European Central Bank (ECB) Guideline 2021/1829 on the procedures for the collection of granular credit and credit risk data has been published in the Official Journal of European Union.