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
EBA Clarifies Use of COVID-19-Impacted Data for IRB Credit Risk Models
The European Banking Authority (EBA) published four draft principles to support supervisory efforts in assessing the representativeness of COVID-19-impacted data for banks using the internal ratings based (IRB) credit risk models.
BIS Hub Updates Work Program for 2022, Announces New Projects
The Bank for International Settlements (BIS) Innovation Hub updated its work program, announcing a set of projects across various centers.
US Senate Members Seek Details on SEC Proposed Climate Disclosure Rule
Certain members of the U.S. Senate Committee on Banking, Housing, and Urban Affairs issued a letter to the Securities and Exchange Commission (SEC)
EIOPA Consults on Review of Securitization Framework in Solvency II
The European Insurance and Occupational Pensions Authority (EIOPA) published a consultation paper on the advice on the review of the securitization prudential framework in Solvency II.
UK Authorities Issue Regulatory and Reporting Updates for Banks
The Prudential Regulation Authority (PRA) issued a statement on PRA buffer adjustment while the Bank of England (BoE) published a notice on the statistical reporting requirements for banks.
BaFin Consults on Resolvability Requirements for Resolution Planning
The Federal Financial Supervisory Authority of Germany (BaFin) proposed to amend the “Capital Investment Conduct And Organization Ordinance” and issued a draft circular on the minimum resolvability requirements for resolution planning.
EBA Consults on Certain Standards and Guidelines Under CRR and BRRD
The European Banking Authority (EBA) proposed guidelines, for the resolution authorities, on the publication of the write-down and conversion and bail-in exchange mechanic, with the comment period ending on September 07, 2022.
OJK Publishes Regulatory Updates for Financial Sector Entities
The Financial Services Authority of Indonesia (OJK) is strengthening cooperation with the Australian Prudential Regulation Authority (APRA) and the Japanese Financial Services Agency (JFSA)
EU Publishes Rules on DLT and Data Governance
The European Parliament and the Council published Regulation 2022/868 on European data governance (Data Governance Act).
EBA Publishes Phase 2 of Reporting Framework 3.2
The European Banking Authority (EBA) published phase 2 of its reporting framework 3.2. The technical package supports the implementation of the updated reporting framework by providing standard specifications
