Featured Product

    ECB Decisions on Longer-Term Refinancing Operations Amid COVID Crisis

    April 30, 2020

    The Governing Council of ECB decided to conduct a new series of seven additional refinancing operations, called the pandemic emergency longer-term refinancing operations (PELTROs). These operations will provide liquidity support to the euro area financial system and contribute to preserving the smooth functioning of money markets by providing an effective backstop after the expiry of the bridge longer-term refinancing operations that have been conducted since March 2020. Additionally, The Governing Council decided on a number of modifications to the terms and conditions of its targeted longer-term refinancing operations (TLTRO III) to support further the provision of credit to households and firms. The changes to TLTRO III will be implemented via amendments to the EU Decision 2019/1311 on TLTRO III (ECB/2019/21).

    PELTROs

    The first operation will be announced on May 19, allotted on May 20, and settled on May 21, 2020. The operations provide longer-term funding to counterparties with decreasing tenors, starting with a tenor of 16 months in the first operation and ending with a tenor of 8 months in the last operation. Counterparties participating in PELTROs will be able to benefit from the collateral easing measures in place until the end of September 2021 that were announced by the Governing Council on April 07 and 23, 2020. The PELTROs will be conducted as fixed rate tender procedures with full allotment. The interest rate will be 25 basis points below the average rate applied in the main refinancing operations (currently 0%) of the Eurosystem over the life of the respective PELTRO.

    Modifications to TLTRO III 

    For the period from June 24, 2020 to June 23, 2021, the interest rate on all TLTRO III operations will now be 50 basis points below the average rate applied in the Eurosystem’s main refinancing operations over the same period. The interest rate on the main refinancing operations is currently 0%. For counterparties whose eligible net lending reaches the lending performance threshold, the interest rate applied from June 24, 2020 to June 23, 2021 on all TLTRO III operations will be 50 basis points below the average interest rate on the deposit facility prevailing over the same period, and in any case not higher than -1%. The deposit facility rate is currently -0.5%. The start of the period over which banks’ lending performance will be assessed to ascertain whether they qualify for this lower rate will be brought forward to March 01, 2020, from April 01, 2020, while the end of the assessment period will remain unchanged at March 31, 2021. 

    For banks that reach the lending threshold of 0% between March 01, 2020 and March 31, 2021, the most favorable conditions will be applied throughout the entire life of the operations. The interest rate applied before June 24, 2020 and after June 23, 2021 for these counterparties will be the average interest rate on the deposit facility over the life of the respective operation. For banks that do not reach the lending threshold of 0% between March 01, 2020 and March 31, 2021, the original TLTRO III interest rates and lending threshold, evaluated over the longer period of between April 01, 2019 and March 31, 2021, will apply. For these counterparties, in recognition of the challenging credit environment during the pandemic period, the lending threshold that they need to meet over this longer assessment period will be lowered to 1.15%, from 2.5%. 

     

    Related Links

    Keywords: Europe, EU, Banking, TLTRO III, Interest Rate, COVID-19, PELTROs, ECB/2020/25, ECB/2019/19, ECB

    Related Articles
    News

    BIS Bulletin Examines Cognitive Limits of Large Language Models

    The use cases of generative AI in the banking sector are evolving fast, with many institutions adopting the technology to enhance customer service and operational efficiency.

    January 25, 2024 WebPage Regulatory News
    News

    ECB is Conducting First Cyber Risk Stress Test for Banks

    As part of the increasing regulatory focus on operational resilience, cyber risk stress testing is also becoming a crucial aspect of ensuring bank resilience in the face of cyber threats.

    January 24, 2024 WebPage Regulatory News
    News

    EBA Continues Momentum Toward Strengthening Prudential Rules for Banks

    A few years down the road from the last global financial crisis, regulators are still issuing rules and monitoring banks to ensure that they comply with the regulations.

    January 24, 2024 WebPage Regulatory News
    News

    EU and UK Agencies Issue Updates on Final Basel III Rules

    The European Commission (EC) recently issued an update informing that the European Council and the Parliament have endorsed the Banking Package implementing the final elements of Basel III standards

    December 19, 2023 WebPage Regulatory News
    News

    Industry Agency Expects Considerable Uptake for Swiss Climate Scores

    The Swiss Federal Council recently decided to further develop the Swiss Climate Scores, which it had first launched in June 2022.

    December 18, 2023 WebPage Regulatory News
    News

    BCBS Consults on Disclosure of Climate Risks, Issues Other Updates

    The Basel Committee on Banking Supervision (BCBS) launched consultation on a Pillar 3 disclosure framework for climate-related financial risks, with the comment period ending on February 29, 2024.

    December 18, 2023 WebPage Regulatory News
    News

    US Government Moves to Regulate Development and Use of AI Models

    The U.S. President Joe Biden signed an Executive Order, dated October 30, 2023, to ensure safe, secure, and trustworthy development and use of artificial intelligence (AI).

    December 18, 2023 WebPage Regulatory News
    News

    MAS Launches Gprnt Digital Platform for ESG Reporting for SMEs

    The Monetary Authority of Singapore (MAS) launched an integrated digital platform, Gprnt, also known as “Greenprint.”

    November 29, 2023 WebPage Regulatory News
    News

    EBA Finalizes Templates for One-Off Climate Risk Scenario Analysis

    The European Banking Authority (EBA) has published the final templates, and the associated guidance, for collecting climate-related data for the one-off Fit-for-55 climate risk scenario analysis.

    November 28, 2023 WebPage Regulatory News
    News

    NGFS Publishes Phase IV Long-term Climate Scenarios for Banks

    The Network for Greening the Financial System (NGFS) published its latest set of long-term climate macro-financial scenarios (Phase IV) for assessing forward-looking climate risks.

    November 28, 2023 WebPage Regulatory News
    RESULTS 1 - 10 OF 8947