CBK announced adjustments to certain regulations and macro-prudential policy tools to empower banks to address challenges posed by the outbreak of COVID-19. To this end, CBK eased certain capital and liquidity requirements to support bank lending. CBK also notified that Moody's Investors Service placed Kuwait's Aa2 long-term issuer rating on a review for downgrade. CBK also published information on the funding mechanism for finance being extended to the individuals, the small and medium-size enterprises, and the economic entities negatively affected by the COVID-19 outbreak.
The recent regulatory instructions are a part of the previous actions taken to support vital economic sectors and enterprises with added value to the local economy and to support people and small and medium enterprises and businesses that are negatively affected by the current circumstances. In terms of liquidity, CBK eased certain requirements associated with the liquidity coverage ratio, the net stable funding ratio, and the regulatory liquidity ratio, also increasing the maximum limits for the negative cumulative mismatch and the maximum lending limits to providing financing. Furthermore, to provide more support to small and medium enterprises, the credit risk weight for the calculation of the capital adequacy ratio is being reduced from 75% to 25%. CBK is also allowing banks to release the capital conservation buffers, thus reducing capital requirements. On financing for private housing and development, the new instructions included increasing the ratio of loans-to-value of the property or the cost of development.
- Press Release on COVID-19 Measures
- Press Release on Rating Downgrade
- Announcement on Funding Mechanism
- Funding Mechanism (PDF in Arabic)
Keywords: Middle East and Africa, Kuwait, Banking, COVID-19, Capital Conservation Buffer, Capital Conservation Buffer, Capital Requirements, SME, Funding Mechanism, Credit Risk, Macro-Prudential Policy, Liquidity Risk, Regulatory Capital, CBK
Previous ArticlePRA Publishes Templates for COVID-19 Disclosures by Banks in UK
BoE published a statistical notice (Notice 2020/9) explaining the approach for treatment of payment holidays on the profit and loss return or Form PL.
BoE updated the known issues document for the statistical reporting Forms AS and FV.
FED announced individual capital requirements for 34 large banks and these requirements go into effect on October 01, 2020.
SRB published a set of documents to give operational guidance to banks on implementation of the bail-in tool.
BIS published an update on the G20 TechSprint Initiative, which was launched in April 2020 and aims to highlight the potential for technologies to resolve regulatory compliance (regtech) and supervisory (suptech) challenges.
OSFI published a letter that provides an update on the milestones for the implementation of the IFRS 17 standard on insurance contracts.
EBA updated the report on the implementation of selected COVID-19 policies.
The Financial Stability Institute (FSI) of BIS published a brief note that examines the supervisory challenges associated with certain temporary regulatory relief measures introduced by BCBS and prudential authorities in response to the COVID-19 pandemic.
BCBS is consulting on the principles for operational resilience and the revisions to the principles for sound management of operational risk for banks.
BoE updated the reporting template for Form ER as well as the Form ER definitions, which contain guidance on the methodology to be used in calculating annualized interest rates.