CBB Introduces Regulatory Measures to Address Impact of COVID Crisis
CBB published a circular introducing, with immediate effect, certain regulatory measures and relaxations, for a period of six months from the date of the circular, to contain the financial repercussions of COVID-19 outbreak. Until further notice, CBB has decided to postpone all the announced regulatory policy initiatives, except the E-KYC rules in the Financial Crime Module. Furthermore, CBB has decided to extend the deadline, to June 30, 2021, for compliance with the revised Operational Risk Modules (Volumes 1 and 2) that were issued on December 31, 2019.
The regulatory measures and relaxations introduced by CBB for a period of six months include the following:
- Retail banks, finance companies, and micro-finance companies must offer any impacted borrower six-month deferral of installments at no fees, no interest on interest, and no increase in rate, unless the borrower agrees for a shorter period.
- For Stage 1 expected credit loss (ECL), the number of days past due, excluding the deferrals mentioned above, must be increased up to 74 days, with effect from February 01, 2020.
- Cooling off period for reclassifying restructured credit facilities from Stage 3 to Stage 2 is reduced from 12 months to 3 months.
- Liquidity coverage ratio (LCR) and net stable funding ratio (NSFR) limits for all locally incorporated banks have been reduced from 100% to 80%.
- Risk-weight for capital adequacy purposes for Bahrain-based small and medium enterprises has been reduced from 75% to 25%.
- Retail banks and financing companies must relax their loan-to-value (LTV) ratio for new residential mortgages for Bahrainis.
- Cash reserve ratio for retail banks is reduced from 5% to 3%.
The above regulatory measures and relaxations are subject to review by CBB at the end of six month period. CBB has also released implementation guidelines regarding the six months deferral.
Related Links
- Regulatory Measures and Relaxations
- Deferral of Implementation of Policy Initiatives
- Implementation Guidelines, March 23, 2020
- Implementation Guidelines, March 24, 2020
Keywords: Middle East and Africa, Bahrain, Banking, COVID-19, LCR, NSFR, Operational Risk, ECL, Residential Mortgage, IFRS 9, Credit Risk, Regulatory Capital, CBB
Featured Experts
María Cañamero
Skilled market researcher; growth strategist; successful go-to-market campaign developer
Nicolas Degruson
Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.
Metin Epözdemir
Metin Epözdemir helps European and African banks with design and implementation of credit risk, stress testing, capital management, and credit loss accounting solutions.
Previous Article
FSC and FSS to Adopt Basel III Credit Risk Framework in June 2020Related Articles
PRA and FPC Finalize Changes to Leverage Ratio Framework in UK
The Prudential Regulation Authority (PRA) published the final policy statement PS21/21 on the leverage ratio framework in the UK. PS21/21, which sets out the final policy of both the Financial Policy Committee (FPC) and PRA
CFPB Proposes Rule on Small Business Lending Data Collection
The Consumer Financial Protection Bureau (CFPB) proposed to amend Regulation B to implement changes to the Equal Credit Opportunity Act (ECOA) under Section 1071 of the Dodd-Frank Act.
PRA Decides to Maintain O-SII Buffers for Another Year
The Prudential Regulation Authority (PRA) decided to maintain, at the 2019 levels, the buffer rates for the Other Systemically Important Institutions (O-SII) for another year, with no new rates to be set until December 2023.
FSB Report Assesses Implementation of Recommendations on Stablecoins
The Financial Stability Board (FSB) published a progress report on implementation of its high-level recommendations for the regulation, supervision, and oversight of global stablecoin arrangements.
APRA Updates Loan Serviceability Expectations for Home Lending
In a letter to the authorized deposit taking institutions, the Australian Prudential Regulation Authority (APRA) announced an increase in the minimum interest rate buffer it expects banks to use when assessing the serviceability of home loan applications.
CPMI and IOSCO Consult on Guidance on Stablecoin Arrangements
The Committee on Payments and Market Infrastructures (CPMI) and the International Organization of Securities Commissions (IOSCO) are consulting on the preliminary guidance that clarifies that stablecoin arrangements should observe international standards for payment, clearing, and settlement systems.
EBA and EIOPA Set Out Work Priorities for 2022
The European Banking Authority (EBA) and the European Insurance and Occupational Pensions Authority (EIOPA) have set out their respective work priorities for 2022.
MFSA Issues Reporting Updates and Guidance for Banks
The Malta Financial Services Authority (MFSA) updated the guidelines on supervisory reporting requirements under the reporting framework 3.0, in addition to the reporting module on leverage under the common reporting (COREP) framework.
EC Publishes Decision on List of Equivalent Third Countries Under CRR
The European Commission (EC) published the Implementing Decision 2021/1753 on the equivalence of supervisory and regulatory requirements of certain third countries and territories for the purposes of the treatment of exposures, in accordance with the Capital Requirements Regulation or CRR (575/2013).
EC Rule on Contractual Recognition of Write-Down and Conversion Powers
EC published the Implementing Regulation 2021/1751, which lays down implementing technical standards on uniform formats and templates for notification of determination of the impracticability of including contractual recognition of write-down and conversion powers.
