On Thursday, 12 March, 2020, the EBA published its statement on actions to mitigate the impact of Coronavirus on the EU banking sector. The EBA notes that the EU banks have strengthened their capital position, built up solid liquidity buffers and improved the quality of their assets since the financial crisis.
Since the outbreak of Coronavirus, the EU banks have implemented a number of measures to ensure business continuity and adequate services to their customers. However, the banks are facing operational challenges, thus they need to focus on their core operations and critical functions.
The priority should be to address all challenges the banks may face. Therefore, the EBA has decided to postpone the EU-wide stress test exercise from this year to 2021.
At the same time, the EBA recommends the EU national competent authorities to plan their supervisory activities, including on-site inspections, in a pragmatic and flexible way, and possibly postpone those deemed non-essential. According to the EBA statement, the national competent authorities could also give banks some leeway in the remittance dates for supervisory reporting.
Furthermore, the EBA encourages the national competent authorities to make full use of the flexibility already embedded in the existing regulatory framework. As an example, the EBA mentions the ECB’s decision to allow banks to cover Pillar 2 capital requirements with capital instruments other than CET 1.
13-3-2020