EC Approves Italian State Guarantee Scheme in Context of COVID-19
EC approved the Italian State guarantee supporting a debt moratorium from banks to small and medium-size enterprises (SMEs) affected by the COVID-19. The scheme was approved under the State aid Temporary Framework, adopted by EC on March 19, 2020, to enable member states to use the full flexibility foreseen under State aid rules to support the economy in the context of the COVID-19 outbreak. The Temporary Framework will be in place until the end of December 2020. Italy notified to EC under the Temporary Framework a State guarantee to support a debt moratorium for SMEs, which includes the postponement of repayments of overdraft facilities, bank advances, bullet loans, mortgages, and leasing operations.
EC found that the Italian measure is in line with the conditions set out in the Temporary Framework. In particular, the guarantee covers a well-defined set of financial exposures and is limited in time. The scheme runs until September 30, 2020 and the guarantee extends for 18 months after the end of the moratorium. Furthermore, the guarantee covers the payment obligations falling under the moratorium. The risk taken by the State is limited to 33%. In any case, before calling on the State guarantee, financial intermediaries must make recovery efforts themselves. To ensure that the measure benefits only SMEs, who experience difficulties due to the COVID-19 outbreak, eligible beneficiaries must not have non-performing exposures prior to March 17, 2020. They also need to certify that their business activity has suffered due to the economic effects of the COVID-19 outbreak.
EC concluded that the guarantee to provide liquidity for SMEs under the moratorium will contribute to managing the economic impact of the COVID-19 outbreak in Italy. The measures are necessary, appropriate, and proportionate to remedy a serious disturbance in the economy of a member state, in line with Article 107(3)(b) Treaty on the Functioning of the European Union and the conditions set out in the Temporary Framework. On this basis, EC approved the measures under EU State aid rules.
Related Links
Keywords: Europe, EU, Italy, Banking, COVID-19, SME, State Aid Rules, Temporary Framework, Credit Risk, EC
Previous Article
OCC Proposes to Eliminate Unnecessary Licensing RequirementsNext Article
IAIS Publishes Newsletter for March 2020Related Articles
BIS and Central Banks Experiment with GenAI to Assess Climate Risks
A recent report from the Bank for International Settlements (BIS) Innovation Hub details Project Gaia, a collaboration between the BIS Innovation Hub Eurosystem Center and certain central banks in Europe
Nearly 25% G-SIBs Commit to Adopting TNFD Nature-Related Disclosures
Nature-related risks are increasing in severity and frequency, affecting businesses, capital providers, financial systems, and economies.
Singapore to Mandate Climate Disclosures from FY2025
Singapore recently took a significant step toward turning climate ambition into action, with the introduction of mandatory climate-related disclosures for listed and large non-listed companies
SEC Finalizes Climate-Related Disclosures Rule
The U.S. Securities and Exchange Commission (SEC) has finalized the long-awaited rule that mandates climate-related disclosures for domestic and foreign publicly listed companies in the U.S.
EBA Proposes Standards Related to Standardized Credit Risk Approach
The European Banking Authority (EBA) has been taking significant steps toward implementing the Basel III framework and strengthening the regulatory framework for credit institutions in the EU
US Regulators Release Stress Test Scenarios for Banks
The U.S. regulators recently released baseline and severely adverse scenarios, along with other details, for stress testing the banks in 2024. The relevant U.S. banking regulators are the Federal Reserve Bank (FED), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC).
Asian Governments Aim for Interoperability in AI Governance Frameworks
The regulatory landscape for artificial intelligence (AI), including the generative kind, is evolving rapidly, with governments and regulators aiming to address the challenges and opportunities presented by this transformative technology.
EBA Proposes Operational Risk Standards Under Final Basel III Package
The European Union (EU) has been working on the final elements of Basel III standards, with endorsement of the Banking Package and the publication of the European Banking Authority (EBA) roadmap on Basel III implementation in December 2023.
EFRAG Proposes XBRL Taxonomy and Standard for Listed SMEs Under ESRS
The European Financial Reporting Advisory Group (EFRAG), which plays a crucial role in shaping corporate reporting standards in European Union (EU), is seeking comments, until May 21, 2024, on the Exposure Draft ESRS for listed SMEs.
ECB to Expand Climate Change Work in 2024-2025
Banking regulators worldwide are increasingly focusing on addressing, monitoring, and supervising the institutions' exposure to climate and environmental risks.