Coronavirus (COVID-19)—targeted EU banking package
Coronavirus (COVID-19)—targeted EU banking package

The following Financial Services practice note provides comprehensive and up to date legal information covering:

  • Coronavirus (COVID-19)—targeted EU banking package
  • Background to the targeted banking package
  • The EU Amending Regulation
  • Transitional arrangements to mitigate IFRS 9 impact
  • Publicly guaranteed loans and the NPL prudential backstop
  • Leverage ratio buffer—date of application
  • Calculating the leverage ratio
  • Exemption of certain software assets from capital deductions—date of application
  • Specific treatment for certain loans backed by pensions or salaries—date of application
  • SME and infrastructure supporting factors—date of application
  • More...

This Practice Note summarises the new targeted banking package of measures proposed by the European Commission in April 2020 to address the impact of the coronavirus (COVID-19). The package comprises an Interpretative Communication on the flexibility within EU accounting and prudential rules, and Regulation (EU) 2020/873 (OJ L 204/4) which makes targeted amendments to the Capital Requirements Regulation (EU) 575/2013 (EU CRR) to encourage banks to lend to mitigate the coronavirus’s economic impact.

Background to the targeted banking package

On 28 April 2020, the European Commission adopted a banking package aimed at facilitating bank lending to households and businesses throughout the EU. The package sought to encourage banks to make full use of the flexibility embedded in the EU’s prudential and accounting framework so that banks could fully support citizens and companies during the pandemic by providing funding. Consisting of targeted ‘quick fix’ amendments to EU banking rules set out in the EU CRR, as well as an Interpretative Communication on the EU’s accounting and prudential frameworks, the package clarified how the existing rules could be applied more flexibly and in a coherent manner across the EU while ‘maintaining a prudent approach so as to preserve financial stability’.

Commenting on the announcement of the proposed package, the European Commission’s executive vice-president for an economy that works for people, Valdis Dombrovskis, said ‘we are supporting households and businesses

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