Featured Product

    EBA Clarifies Application of Selected COVID-19 Policies for Banks

    January 29, 2021

    EBA published additional clarifications on issues raised on the application of prudential framework, as a consequence of the COVID-19 pandemic. The clarifications mainly cover the EBA guidelines on moratoria and COVID-19 reporting, operational risk, downturn LGD estimation, and treatment of COVID‐19 public guarantee schemes. This report is a part of the wider monitoring of the implementation of COVID-19 policies by EBA as well as of the application of existing policies under these exceptional circumstances.

    The clarifications update the frequently asked questions (FAQs) section in the EBA report (previous version was dated December 21, 2020) on COVID-19 implementation policies. The update includes additional technical clarifications on the application of the guidelines on moratoria related to the recent re-activation of the EBA guidelines on payment moratoria. EBA has provided clarifications on the functioning of the nine-month cap, which limits the period of time for which payments on a certain loan can be suspended, postponed, or reduced as a result of the application (and reapplication) of general payment moratoria. These clarifications explain how to apply the guidelines on moratoria when assessing forbearance classification and how to determine whether there is a diminished financial obligation in relation to moratoria applied to loans exceeding the nine-month cap. Regarding reporting and disclosures, the updated report covers the treatment of loans and advances subject to expired moratoria; it clarifies that when a moratorium expires, the loans and advances subject to this expired measure should be reported, regardless of whether they are subject to another measure.

    The report also includes considerations for criteria that institutions should adopt with regard to operational risk in the context of the pandemic. The common criteria provided in the report aim to reduce possible inconsistencies in the calculation of capital requirements and supervisory reporting for operational risk. This will allow institutions to have a clear view of supervisory and regulatory expectations, when dealing with operational risk events and losses stemming from the COVID‐19 pandemic. The report also includes clarifications on the likely identification of a COVID‐19‐triggered downturn period and its incorporation into downturn LGD estimation. Finally, the report clarifies the treatment of COVID‐19 public guarantee schemes as a form of credit risk mitigation under the advanced internal ratings-based, or A-IRB, approach. In consideration of the rapid succession of COVID‐19‐related events, the report may be updated in the future with additional clarification on the prudential treatment of COVID‐19‐related measures as well as on the implementation issues surrounding the existing policies in the context of the current pandemic.  

     

    Related Links

    Keywords: Europe, EU, Banking, COVID-19, Basel, Reporting, FAQ, Credit Risk, Operational Risk, Disclosures, IRB Approach, Loan Moratorium, Loan Guarantee, Regulatory Capital, EBA

    Featured Experts
    Related Articles
    News

    ESAs Issue Multiple Regulatory Updates for Financial Sector Entities

    The three European Supervisory Authorities (ESAs) issued a letter to inform about delay in the Sustainable Finance Disclosure Regulation (SFDR) mandate, along with a Call for Evidence on greenwashing practices.

    November 15, 2022 WebPage Regulatory News
    News

    FSB and NGFS Publish Initial Findings from Climate Scenario Analyses

    The Financial Stability Board (FSB) and the Network for Greening the Financial System (NGFS) published a joint report that outlines the initial findings from climate scenario analyses undertaken by financial authorities to assess climate-related financial risks.

    November 15, 2022 WebPage Regulatory News
    News

    FSB Issues Reports on NBFI and Liquidity in Government Bonds

    The Financial Stability Board (FSB) published a letter intended for the G20 leaders, highlighting the work that it will undertake under the Indian G20 Presidency in 2023 to strengthen resilience of the financial system.

    November 14, 2022 WebPage Regulatory News
    News

    ISSB Makes Announcements at COP27; IASB to Propose IFRS 9 Amendments

    The International Sustainability Standards Board (ISSB) of the IFRS Foundations made several announcements at COP27 and with respect to its work on the sustainability standards.

    November 10, 2022 WebPage Regulatory News
    News

    IOSCO Prioritizes Green Disclosures, Greenwashing, and Carbon Markets

    The International Organization for Securities Commissions (IOSCO), at COP27, outlined the regulatory priorities for sustainability disclosures, mitigation of greenwashing, and promotion of integrity in carbon markets.

    November 09, 2022 WebPage Regulatory News
    News

    EBA Finalizes Methodology for Stress Tests, Issues Other Updates

    The European Banking Authority (EBA) issued a statement in the context of COP27, clarified the operationalization of intermediate EU parent undertakings (IPUs) of third-country groups

    November 09, 2022 WebPage Regulatory News
    News

    EU Finalizes Rules Under Crowdfunding Service Providers Regulation

    The European Union has finalized and published, in the Official Journal of the European Union, a set of 13 Delegated and Implementing Regulations applicable to the European crowdfunding service providers.

    November 08, 2022 WebPage Regulatory News
    News

    OSFI Sets Out Work Priorities and Reporting Updates for Banks

    The Office of the Superintendent of Financial Institutions (OSFI) published an annual report on its activities, a report on forward-looking work.

    November 07, 2022 WebPage Regulatory News
    News

    APRA Finalizes Changes to Capital Framework, Issues Other Updates

    The Australian Prudential Regulation Authority (APRA) finalized amendments to the capital framework, announced a review of the prudential framework for groups.

    November 03, 2022 WebPage Regulatory News
    News

    BIS Hub and Central Banks Conduct CBDC and DeFI Pilots

    The Bank for International Settlements (BIS) Innovation Hubs and several central banks are working together on various central bank digital currency (CBDC) pilots.

    November 03, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8596