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
APRA Issues Interim Update to Policy Priorities for 2021 and Beyond
In a letter addressed to the industry, the Australian Prudential Regulation Authority (APRA) set out an updated schedule of policy priorities for the banking, insurance, and superannuation industries.
EC Adopts Solvency II and Resolution Rules Package for Insurers
The European Commission (EC) adopted a comprehensive review package of Solvency II rules in the European Union.
OCC Issues Booklets on Regulatory Reporting and Earnings
The Office of the Comptroller of the Currency (OCC) issued Versions 1.0 of the "Earnings" and "Regulatory Reporting" booklets of the Comptroller's Handbook.
ECB Sets Out Results of Economy-Wide Climate Stress Tests
The European Central Bank (ECB) published results of its economy-wide climate stress test, which aimed to assess the resilience of non-financial corporates and euro area banks to climate risks.
EBA Examines Implications of Increasing Use of Digital Platforms in EU
The European Banking Authority (EBA) published a report on the use of digital platforms in the banking and payments sector in European Union.
HKMA Issues Updates on Policy Measures Intended to Ease COVID Impact
The Hong Kong Monetary Authority (HKMA) published updates on the policy measures that were announced in context of the ongoing pandemic.
ISDA Responds to BCBS Proposal on Treatment of Cryptoasset Exposures
The International Swaps and Derivatives Association (ISDA), along with several other associations, submitted a joint response to the Basel Committee on Banking Supervision (BCBS) consultation on preliminary proposals for the prudential treatment of cryptoasset exposures.
BIS Quarterly Review Discusses Developments in Fintech and ESG Space
BIS published the September issue of the Quarterly Review, which contains special features that analyze the rapid rise in equity funding for financial technology firms, the effectiveness of policy measures in response to pandemic, and the evolution of international banking.
BCBS to Consult on Supervisory Practices for Climate Risks by Year-End
The Basel Committee for Banking Supervision (BCBS) met in September 2021 and reviewed climate-related financial risks, discussed impact of digitalization, and welcomed efforts by the International Financial Reporting Standards (IFRS) Foundation to develop a common set of sustainability reporting standards
OCC Identifies Operational Risk Deficiencies in MUFG Union Bank
The Office of the Comptroller of the Currency (OCC) issued a Cease and Desist Order against MUFG Union Bank for deficiencies in technology and operational risk governance.
