Featured Product

    MEPs Approve Amendments to CRR to Ease Impact of COVID-19 Pandemic

    June 10, 2020

    The Economic and Monetary Affairs Committee of the Members of the European Parliament (MEP) approved new rules to temporarily ensure favorable conditions for banks to support credit flow to companies and households and absorb losses while mitigating the severe economic consequences of the COVID-19 pandemic. The changes that were agreed on apply to the Capital Requirements Regulation (CRR) and these changes will have to be coherently applied throughout the EU. Banks are being expected to monitor the effects of the pandemic on their balance sheets, pay close attention to non-performing loans, and apply know-your-customer standards.

    The adopted rule changes include the following:

    • Two-year extension of the transitional arrangements for IFRS 9 and further relief measures (capital add back) to ensure that banks can further provide credit to the real economy
    • Alignment of minimum coverage requirements for non-performing loans guaranteed by the public sector, with those guaranteed by official export credit agencies
    • Deferred application of the leverage ratio buffer by one year to January 2023, further allowing banks to increase the amount of funds they would be able to loan
    • Advanced application of a more favorable prudential treatment of loans to pensioners or employees with a permanent contract that are backed by the borrower's pension or salary
    • Advanced application of both, the small and medium enterprise (SME) and infrastructure supporting factors, which allows for a more favorable prudential treatment of certain exposures to SMEs and infrastructure, ensuring credit flow to SMEs and supporting infrastructure investments
    • Removal of the requirement for banks to deduct certain software assets from their capital, supporting an accelerated digitalization of the banking sector
    • Liquidity measures provided by central banks in a crisis context to be effectively channeled by banks to the economy

    To support funding options in non-euro member states fighting the consequences of the COVID-19 pandemic, the Economic and Monetary Affairs Committee reintroduced transitional arrangements related to preferential treatment for when government and central banks are exposed to bonds denominated in currencies of non-euro member states and prolonged transitions with respect to their treatment under the large exposure limits. Taking into account the extraordinary impact of the COVID-19 pandemic and the extreme levels of volatility in the financial markets leading to increased yields for public debt and, in turn, to unrealized losses on banks' holdings of public debt, the European Parliament agreed to introduce a temporary prudential filter to calculate losses accumulated since December 31, 2019 and to neutralize their impact.

     

    Related Links 

    Keywords: Europe, EU, Banking, COVID-19, Credit Risk, IFRS 9, Leverage Ratio, Operational Risk, Large Exposures, Non-Performing Loans, ECON, Basel, EP, European Parliament

    Featured Experts
    Related Articles
    News

    EFRAG Proposes XBRL Taxonomy and Standard for Listed SMEs Under ESRS

    The European Financial Reporting Advisory Group (EFRAG), which plays a crucial role in shaping corporate reporting standards in European Union (EU), is seeking comments, until May 21, 2024, on the Exposure Draft ESRS for listed SMEs.

    February 23, 2024 WebPage Regulatory News
    News

    ECB to Expand Climate Change Work in 2024-2025

    Banking regulators worldwide are increasingly focusing on addressing, monitoring, and supervising the institutions' exposure to climate and environmental risks.

    February 23, 2024 WebPage Regulatory News
    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
    RESULTS 1 - 10 OF 8949