ECB supports the measures taken by euro area macro-prudential authorities to address the impact of COVID-19 outbreak on the financial sector. ECB has assessed the notifications submitted by national macro-prudential authorities for each proposed measure provided for in the Capital Requirements Regulation and Directive and has issued a non-objection decision endorsing these measures. The measures include releases or reductions of the countercyclical capital buffer, systemic risk buffer, and buffers for other systemically important institutions. In addition, some authorities have postponed or revoked earlier announced measures to avoid placing pressure on banks to accumulate capital buffers in a downturn.
The measures announced by national macro-prudential authorities since March 11, 2020 will free up more than EUR 20 billion of Common Equity Tier 1 capital held by euro area banks. These macro-prudential actions complement and reinforce the measures announced by ECB Banking Supervision since March 12, 2020. The following are the key developments in this area:
- Among the seven euro area countries with positive rates, authorities in France, Ireland, and Lithuania reduced the countercyclical capital buffer to 0% and those in Belgium and Germany revoked the previously announced countercyclical capital buffer activations. In turn, euro area banks have seen their requirements reduced by the countercyclical capital buffer reductions in Denmark, Hong Kong, Iceland, Norway, Sweden, and UK.
- The authorities in Estonia and Finland dropped the systemic risk buffer to 0% while the authority in the Netherlands reduced the existing 3% systemic risk buffer for three institutions.
- In combination with the reductions in the systemic risk buffer, Finland and the Netherlands also decided to lower the other systemically important institution buffer for one bank each. For the institutions in Finland this ensures that the combined structural buffers are effectively reduced by 1% of risk-weighted assets.
- Cyprus announced that it will delay the phase-in of other systemically important institution buffers by one year, while the Netherlands postponed the introduction of capital surcharges on domestic mortgage loan exposures under Article 458 of the Capital Requirements Regulation.
Keywords: Europe, EU, Banking, COVID-19, CCyB, SRB, O-SII, CRR/CRD, Systemic Risk, Basel III, Regulatory Capital, ECB
EIOPA submitted—to the European Parliament, the Council of the European Union, and EC—its 2020, fifth, and last annual report on long-term guarantee measures and measures on equity risk.
The BIS Innovation Hub Swiss Centre, SNB, and the financial infrastructure operator SIX announced the successful completion of a joint proof-of-concept (PoC) experiment as part of the Project Helvetia.
EBA published the final draft regulatory technical standards for calculation of own funds requirements for market risk, under the standardized and internal model approaches of the Fundamental Review of the Trading Book (FRTB) framework.
EIOPA published discussion paper on a methodology for the potential inclusion of climate change in the Solvency II (sometimes also written as SII) standard formula when calculating natural catastrophe underwriting risk.
EU published, in the Official Journal of the European Union, corrigenda to the Directive and the Regulation on the prudential requirements and supervision of investment firms.
MAS proposed amendments to certain regulations, notices, and guidelines arising from the Banking (Amendment) Act 2020.
PRA published a statement that explains when to expect further information on the PRA approach to transposing the Capital Requirements Directive (CRD5), including its approach to revisions to the definition of capital for Pillar 2A.
RBNZ launched consultations on the scope of the Insurance Prudential Supervision Act (IPSA) 2010 and on the associated Insurance Solvency Standards.
SRB published the work program for 2021-2023, setting out a roadmap to further operationalize the Single Resolution Fund and to achieve robust resolvability of banks under its remit over the next three years.
EIOPA is consulting on the relevant ratios to be mandatorily disclosed by insurers and reinsurers falling within the scope of the Non-Financial Reporting Directive as well as on the methodologies to build these ratios.