On 28 April 2020, the European Commission published information on the adoption of a banking package aimed at facilitating lending to households and companies in the EU as a policy response to the COVID-19 pandemic.
The banking package includes:
1. Communication on accounting and prudential rules
In its communication (communication), the Commission states that the regulatory framework for banks offers sufficient scope for public and private initiatives that aim to promote continued lending to clients affected by the pandemic. The Commission encourages banks to make full use of the flexibility embedded in the existing accounting and prudential rules.
The Commission confirms and, at the same time, reiterates the previous key messages from the EBA, ECB and other authorities on the flexibility of prudential rules.
2. Legislative proposal to amend the EU´s banking prudential rules
The Commission proposes (regulation) temporary legislative changes to the CRR in order to maximise the ability of banks to lend to clients during the pandemic. The proposal includes the following changes to the CRR:
Update of transitional provisions to mitigate the effects of the implementation of IFRS 9
The Commission proposes to extend the transitional provisions by 2 years where provisions created in 2020 and 2021 could be returned back to capital.
Later implementation date of leverage ratio buffer
The Commission proposes to move the implementation date of the leverage ratio buffer for global systemically important institutions from the original date of 1 January 2022 to 1 January 2023.
More favourable treatment of publicly guaranteed loans under the NPL prudential backstop
The Commission proposes to temporarily extend the preferential treatment applied to export credit agency guarantees to guarantee schemes issued by the public sector in connection with the pandemic.
Changes in the calculation of leverage ratio
The Commission proposes to adjust the compensation mechanism applied in the calculation of leverage ratio when central bank reserves are temporarily excluded from the calculation.
Earlier date of application of the exemption of certain software assets from capital deductions
The Commission proposes an earlier implementation of the CRR 2 provision which allows a prudently valued software not to be deducted from capital. The original implementation date of 12 months after the entry into force of the relevant EBA technical standard has been shortened by 12 months, i.e. to the date when the respective EBA technical standard enters into force.
Earlier date of application of the new SME supporting factor
The Commission proposes an earlier application of the new SME supporting factor from the original date of 28 June 2021 to the date when this amendment to the CRR enters into force.
The proposal will now be discussed by the European Parliament and the Council. The Commission assumes that the adoption could take place as early as in June this year.
28-5-2020