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18 December 2020 / news

Initiatives taken by international, European and Belgian banking, investment and insurance supervisors in the context of the coronavirus crisis

The corona crisis is having a major impact on banks, insurers and financial markets. The shortage of liquidity is described as unprecedented. Regulators are in the forefront trying to mitigate the negative effects of the crisis by adopting supportive measures and recommendations for the sectors. The list below provides a chronological summary of these measures based on texts published by official sources.

Initiatives taken by European and Belgian regulatory authorities in the context of the coronavirus

Updated 25 November 2020

Each Thursday, the overview below will be updated with recent official announcements published during the preceding week.

BCBS: Basel Committee on Banking Supervision / IAIS: International Association of Insurance Supervisors / IOSCO: International Organization of Securities Commissions / EBA: The European Banking Authority / ECB: European Central Bank / EIOPA: European Insurance and Occupational Pensions Authority / ESMA: European Securities and Market Authority / FSMA: Financial Services and Markets Authority / NBB: National Bank of Belgium / NCA: National Competent Authorities

Click here for an overview from March 2020 until July 2020.

International (standard setting) bodies

Authority

Action taken

Summary

Link

BCBS

Covid-19 & banking supervision: where do we go from here?

The overarching theme for this year's ICBS - the future of supervision in a changing world - is perhaps more relevant than ever before. The world has changed profoundly since the outbreak of Covid-19 seven months ago. The uniqueness of the sudden stop to the global economy in response to the tragic health crisis is only matched by the sheer uncertainty about the outlook. To borrow a sports metaphor, we still do not know if we are in the first inning, quarter or half of this crisis. Uncertainty is the only certainty there is.

 

So what is the future of supervision in this changing world, and what can we learn from the current crisis? (…) Yet we have already seen fundamental changes to the way we live and work. For example, we witnessed a tremendously rapid shift to remote working arrangements across many sectors. (…) So there is merit in starting a discussion about what we have learned to date and, more importantly, the future and changes that we want to see in banking supervision. Allow me to outline some personal thoughts on these issues, which may not necessarily represent the view of the Basel Committee.

Link

 

European Supervisory Authorities

Date

Authority

Action taken

Summary

Link

25 November 2020

ECB

ECB review sees increased medium-term vulnerabilities for corporates and banks

ECB’s review indicates that:

-          dispersed economic and financial market impact on countries and sectors could lead to concentration of risks in some areas

-          Policy measures have addressed liquidity challenges but risks can arise from premature or delayed withdrawal of fiscal support

-          Bank profitability prospects remain weak with losses potentially materialising with a lag relative to the recovery

Link

20 November 2020

EBA

Banks report a significant use of COVID-19 moratoria and public guarantees

The EBA published today a first assessment of the use of COVID-19 moratoria and public guarantees across the EU banking sector. COVID-19 related moratoria on loan repayments provided breathing space to borrowers across many countries with many banks reporting that loans under moratoria represented a significant share of their total loans. The use of moratoria was particularly widespread for SMEs and commercial real estate but were also important for mortgage loans in some countries. While public guarantees were used to a lesser extent, they allowed banks to provide new lending to many companies impacted by the crisis. The EBA will be closely monitoring the evolution of moratoria and public guarantee schemes (PGSs) in the following quarters.

Link

21 September 2020

EBA

EBA phases out its Guidelines on legislative and non-legislative loan repayments moratoria

The EBA has been closely monitoring the developments of the COVID-19 pandemic and, considering the progress made so far, will phase out its Guidelines on legislative and non-legislative payment moratoria in accordance with its end of September deadline.  These Guidelines, which were published in the early phases of the COVID-19 pandemic, have provided the necessary flexibility as well as certainty on the regulatory framework, in light of significant number of actions taken by banks to support their customers as exceptional lock-down measures were put in place. The continued ability for banks to provide lending is of key importance and the EBA will keep monitoring the situation as needed.

Link

17 September 2020

ESMA

Renewal decision requiring net short position holders to report positions of 0.1% and above

The ESMA renewed its decision to temporarily require the holders of net short positions in shares traded on a European Union (EU) regulated market to notify the relevant national competent authority (NCA) if the position reaches or exceeds 0.1% of the issued share capital. The measure applies from 18 September 2020 for a period of three months.

Link

28 August 2020

ECB

ECB extends euro liquidity lines with two central banks

 

 

28 August 2020

ESMA

Proposal to further postpone CSDR settlement discipline

The RTS on settlement discipline cover measures to prevent and address settlement fails including:

·       rules for the trade allocation and confirmation process;

·       cash penalties on failed transactions;

·       mandatory buy-ins; and

·       monitoring and reporting of settlement fails.

 

The measure is additional to the Commission Delegated Regulation (EU) 2020/1212, based on ESMA’s proposal to amend the RTS on settlement discipline to postpone its date of entry into force from 13 September 2020 to 1 February 2021.

Link

11 August 2020

EBA

Guidance on impact of CRR adjustments in response to the COVID‐19 pandemic on supervisory reporting and disclosure

The EBA published a revised version of its Implementing Technical Standards (ITS) on supervisory reporting v3.0 and two sets of Guidelines on disclosures and supervisory reporting requirements. These products provide clarifications on the application of certain adjustments (“quick fix”) on institutions’ disclosures and supervisory reporting introduced in the Capital Requirements Regulation (CRR) in response to the COVID19.

Link

7 August 2020

EBA

Clarity on the implementation of the reporting and disclosure framework in the context of COVID-19 measures

The EBA published some frequently asked questions related to the implementation of its Guidelines on reporting and disclosure of exposures subject to measures applied in response to the COVID-19 crisis. The technical clarifications provided by the EBA will assist supervisors and credit institutions in the implementation of the Guidelines. The implementation questions and technical clarifications have been included in a newly added section 4 to the EBA Report on the implementation of selected COVID-19 policies, first published on 7 July 2020.

Link

 

Belgian supervisory authorities

 

Authority

Action taken

Summary

Link

NBB

Publication Covid-19 economical dashboard

How does business and consumer confidence evolve? Are many families suffering loss of income due to COVID-19? Do entrepreneurs fear many bankruptcies? How big is the job loss and is unemployment increasing? What about Belgian deposit accounts? Will the banks continue to grant loans? Are many loans taken out with state guarantees? Do many families and businesses have problems repaying their loans? Has the Belgian been saving more or less since the start of the pandemic? How is the crisis proceeding in other countries? The NBB / ERMG Dashboard offers an answer to these and many other questions.

Link (NL)

 

Link (FR)

 

Other useful references (legal doctrine; working papers; blog articles; …)

 

Date

Authority

Action taken

Summary

Link

19 November 2020

ECB

Speech

COVID-19 and the liquidity crisis of non-banks: lessons for the future

Link

12 November 2020

ECB

Speech

Banking Union and Capital Markets Union after COVID-19

 

Link

11 November 2020

ECB

Speech

Monetary policy in a pandemic emergency

Link

19 October 2020

ECB

Speech

The ECB’s monetary policy amid the pandemic

Link

6 October 2020

ECB

Speech

The ECB’s monetary policy in the pandemic: meeting the challenge

Link

18 September 2020

ECB

Speech

Unequal scars – distributional consequences of the pandemic

Link

15 September 2020

ECB

Speech

Healing after the pandemic: supporting and sustaining the recovery

Link

11 September 2020

ECB

Speech

Supervisory action in times of crisis and the limits of the ECB’s prudential mandate

Link

September 2020

ECB

Working Paper

The great lockdown: pandemic response policies and bank lending conditions

Link

27 August 2020

ECB

Speech

The pandemic emergency: the three challenges for the ECB

Link

 



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