CMF Extends Treatment of Provisions for Loan Rescheduling Amid Crisis
CMF decided to extend, until August 31, 2020, part of the temporary measures for the treatment of credit risk provisions applicable to banks and supervised savings and credit cooperatives. CMF had announced these measures in April 2020 to ease the impact of COVID-19 outbreak and these measures had been scheduled to expire on July 31, 2020. CMF also published a report on the performance of supervised banks and cooperatives as of June 2020. In addition to the usual information, the performance report includes a review of the COVID-19 guaranteed loans granted under Guarantee Fund for Small Entrepreneurs (FOGAPE) at the end of the first half of 2020.
The temporary measures that were announced to ease the impact of COVID-19 outbreak allow banks and cooperatives not to consider increased provisions for loan installments that are rescheduled under this special treatment. The one-month extension on this treatment will apply to housing and commercial loans. The aim of the measures is to facilitate loan rescheduling for debtors that have been affected by the COVID-19 pandemic, but still have the capacity to pay in the future. This special treatment provided by CMF does not relieve financial institutions of the responsibility to conduct an adequate assessment of their credit and liquidity risk management, which is necessary to avoid compromising the financial strength.
Related Links
Keywords: Americas, Chile, Banking, COVID-19, Credit Risk, Liquidity Risk, Payment Deferrals, Loan Moratorium, Loan Guarantee, FOGAPE, CMF
Featured Experts
Victor Calanog, Ph.D.
Leading economist; commercial real estate; performance forecasting, econometric infrastructure; data modeling; credit risk modeling; portfolio assessment; custom commercial real estate analysis; thought leader.
Previous Article
BoE Supports Central Banks in Africa and Asia to Manage COVID ShockRelated Articles
FSB Sets Out Effective Practices for Cyber Incident Recovery
FSB finalized the toolkit of effective practices to assist financial institutions in their cyber incident response and recovery activities.
HKMA Urges Early Action for Adherence to IBOR Fallbacks Protocol
HKMA urged authorized institutions to take early action to adhere to the IBOR Fallbacks Protocol, which ISDA is expected to publish soon.
FSB Sets Out Roadmap for Transition to Alternative Reference Rates
FSB published a global transition roadmap for London Inter-bank Offered Rate (LIBOR).
HM Treasury Publishes Response to Proposal on BRRD2 Transposition
HM Treasury published a document that summarizes the responses received from a consultation on the approach of UK to transposition of the revised Bank Resolution and Recovery Directive (BRRD2).
HM Treasury Publishes Response to Proposal on CRD5 Transposition
HM Treasury published the government response to the feedback received on the consultation for updating the prudential regime of UK before the end of the Brexit transition period.
BoE Publishes Reporting Schedule for Statistical Returns
In a recent statistical notice, BoE announced publication of the reporting schedule for statistical returns for 2021.
EC Welcomes Declaration by Member States on EU Cloud Federation
EC welcomed the joint declaration by 25 EU member states on building the next generation of cloud in Europe.
MAS Amends Notice on Issuance of Covered Bonds by Banks in Singapore
MAS published amendments to Notice 648 on the issuance of covered bonds by banks incorporated in Singapore.
FDIC Selects Technology Companies for Rapid Prototyping Competition
FDIC has selected 14 technology companies—including Accenture Federal Services, LLC, Fed Reporter, Inc, and S&P Global Market Intelligence, LLC—for inclusion in the next phase of the rapid prototyping competition.
GLEIF Defines New Validation Agent Role for Financial Institutions
GLEIF announced that financial institutions worldwide can realize a variety of cost, efficiency, and customer experience benefits by assuming a new “validation agent” role within the Global Legal Entity Identifier (LEI) System.
