FED issued a statement to provide additional information to financial institutions regarding adjustments to its supervisory approach in light of the COVID-19. The key topics on which additional information has been provided include increased focus on monitoring, changed focus on examinations, extended time periods for remediation of supervisory findings, and continuous communication with institutions. Additionally, FED announced that it will establish a Primary Dealer Credit Facility (PDCF) and Commercial Paper Funding Facility (CPFF) to support credit needs of households and businesses.
In its statement on adjustments to its supervisory approach, FED provides the following key information:
- FED will focus on monitoring and outreach to help financial institutions of all sizes understand the challenges and risks of the current environment
- To minimize disruption and to focus on outreach and monitoring, FED will temporarily reduce its examination activities, with the greatest reduction in activities occurring at the smallest banks. FED intends to reassess its approach to examinations in the last week of April to determine whether conditions have changed.
- Large banks should still submit their capital plans that they have developed as part of the Comprehensive Capital Analysis and Review (CCAR) by April 06, 2020. The plans will be used to monitor how firms are managing their capital in the current environment
- To allow firms to focus on heightened risks in this current environment and assist consumers, additional time will be granted for resolving non-critical existing supervisory findings. FED is extending the time periods for remediating existing supervisory findings by 90 days, unless FED notifies the firm that a more timely remediation would aid the firm in addressing a heightened risk or help consumers.
Additionally, CFTC announced that in response to the COVID-19 pandemic, the Division of Swap Dealer and Intermediary Oversight (DSIO) issued two additional no-action letters providing temporary, targeted relief to a large U.S. bank that helps finance America’s oil and gas sector and to those who operate commodity-focused investment funds the CFTC regulates. DSIO has granted temporary, targeted no-action relief to Commodity Pool Operators from certain reporting requirements.
- Press Release on Supervisory Approach
- Statement on Supervisory Approach (PDF)
- Press Release on PDCF
- Press Release on CPFF
Keywords: Americas, US, Banking, Securities, COVID-19, Supervisory Approach, CCAR, PDCF, CPFF, Deadline Extension, Swaps, Swap Dealer, Investment Funds, Reporting, CFTC, FED
Previous ArticleECB Amends Rule on Reporting of Supervisory Financial Information
PRA, via the consultation paper CP12/20, proposed changes to its rules, supervisory statements, and statements of policy to implement certain elements of the Capital Requirements Directive (CRD5).
EIOPA published the financial stability report that provides detailed quantitative and qualitative assessment of the key risks identified for the insurance and occupational pensions sectors in the European Economic Area.
EBA published its risk dashboard for the first quarter of 2020 together with the results of the risk assessment questionnaire.
EBA announced that the next stress testing exercise is expected to be launched at the end of January 2021 and its results are to be published at the end of July 2021.
PRA published the consultation paper CP11/20 that sets out its expectations and guidance related to auditors’ work on the matching adjustment under Solvency II.
MAS published a statement guidance on dividend distribution by banks.
APRA updated its capital management guidance for banks, particularly easing restrictions around paying dividends as institutions continue to manage the disruption caused by COVID-19 pandemic.
FSB published a report that reviews the progress on data collection for macro-prudential analysis and the availability and use of macro-prudential tools in Germany.
EBA issued a statement reminding financial institutions that the transition period between EU and UK will expire on December 31, 2020; this will end the possibility for the UK-based financial institutions to offer financial services to EU customers on a cross-border basis via passporting.
SRB published guidance on operational continuity in resolution and financial market infrastructure (FMI) contingency plans.