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Global reactions to theCOVID-19 crisis[collection as of March 26, 2020]

Click on the to get an overview of the current reactions ofthe government, central banks and (N)CAs in the respective jurisdiction

names

Global reactions to the COVID-19 crisis

Europe

Japan

Australia

Singapore

Hong Kong

QatarUSA

South Africa

BCBS

Israel

China

Canada

South Korea

PwC

Basel Committee of Banking Supervision (BCBS)

Publicly available information

• Press Release (3/20/2020): https://www.bis.org/press/p200320.htm

• The BCBS supports the objectives of the measures taken by member jurisdictions and highlights that members have the flexibility to undertake further steps if needed under the current Basel III framework.

• The BCBS also acknowledges the extraordinary circumstances and announced that, in the immediate term, the consultation on all policy initiatives would be suspended and all outstanding jurisdictional assessments planned in 2020 under its Regulatory Consistency Assessment Programme (RCAP) will be postponed.

• The BCBS is considering additional measures aimed at supporting the financial resilience of banks and the operational resilience of both the banking and supervisory community.

Reactions & measures

Information as of March 26, 2020. Non-exhaustive list; collectedby PwC network firms 3

March 26, 2020Reactions to COVID-19

PwC

Australia

Publicly available information• APRA (Australian Prudential Regulation Authority): https://www.apra.gov.au/• RBA (Reserve Bank of Australia): https://www.rba.gov.au/

Reactions & measures

• Many banks have recently announced COVID-19 support packages that provide affected borrowers with an option to defer their repayments for a periodof up to six months. These packages have mainly been offered to small business and home loan customers.

• Where a borrower who has been meeting its repayment obligations until recently chooses to take up the offer not to make repayments as part of a COVID-19 support package, the bank need not treat the period of the repayment holiday as a period of arrears. Similarly, loans that have been granteda repayment deferral as part of a COVID-19 support package need not be regarded as restructured.

• APRA will require ADIs to report to APRA, and publicly disclose, the nature and terms of any repayment deferrals and the volume of loans to which theyare applied. ADIs must also still continue to provision for these loans under relevant accounting standards.

• The Reserve Bank has cut interest rates to a record low 0.25 per cent• The RBA will buy Australian government bonds as part of its first-ever quantitative easing program. The RBA said it would also provide at least $90

billion at 0.25 per cent over three years to banks if they lend that cash to small and medium-sized businesses.• The Bank will also be conducting one-month and three-month repo operations in its daily market operations until further notice to provide liquidity to

Australian financial markets. In addition the Bank will conduct longer term repo operations of six-months maturity or longer at least weekly, as long asmarket conditions warrant.

• Coronavirus SME Guarantee Scheme: APRA confirmed this is to be regarded as an eligible guarantee by the government for risk-weighting purposes

Information as of March 26, 2020. Non-exhaustive list; collectedby PwC network firms 4

March 26, 2020Reactions to COVID-19

PwC

Canada

Publicly available information• Bank of Canada: https://www.bankofcanada.ca/markets/market-operations-liquidity-provision/covid-19-actions-support-economy-financial-system/• Office of the Superintendent of Financial Institutions (OSFI): https://www.osfi-bsif.gc.ca/Eng/osfi-bsif/med/Pages/nr_20200313.aspx

• Reducing the Domestic Stability Buffer (DSB) which is an additional supervisory buffer on top of Pillar 1 capital requirements imposed on Canadian based G-SIBs and D-SIBs by 1.25%, releasing what is expected to amount to approx. $300bn in RWA to free up for lending. OSFI has stated this capital is not to be used for share buybacks or dividend hikes.

• Suspending consultation and any further action on mortgage benchmark rate reform• Bank of Canada has cut benchmark rate by 50 bps - more cuts expected• Broadened the scope of a bond buy back program to help provide liquidity to the market. • Additional programs to provide loans to financial institutions in need of temporary liquidity where the bank does not have concern about the soundness

of the receiving institution. • Governmental program that will guarantee previously uninsured mortgages - allowing the government through the Canadian Mortgage and Housing

Corp to purchase up to $50 billion of these loans to provide further liquidity to the market.• Large banks are also now offering forbearance arrangements in the form of payment relief programs. The banks are still working through the mechanics

of these programs and impacts on accounting and expected credit losses and RWA treatment.

Reactions & measures

Information as of March 26, 2020. Non-exhaustive list; collected by PwC network firms 5

March 26, 2020Reactions to COVID-19

PwC

China (Mainland)

Publicly available information• Central bank of China (PBOC)

Reactions & measures

• Several measures to protect SMEs and maintain the financial stability by leveraging a number of monetary policy tools such as open market operations, standing lending facilities (SLF), re-financing, and re-discounting in order to inject sufficient liquidity to the economy

• The central bank implemented a targeted reserve rate cut of between 0.5% and 1%, a further reserve rate cut of 1% for qualified commercial banks with loan issuance to inclusive financial sector.

• SMEs and micro enterprises hit hard by COVID-19 can make apply for deferring the repayment of principal and interest expenses till June 30, 2020 at the latest, for repayment due between January 25 and June 30, 2020. Overdue loan repayments during the period will not be subject to penalties.

Information as of March 26, 2020. Non-exhaustive list; collectedby PwC network firms 6

March 26, 2020Reactions to COVID-19

PwC

Hong Kong

Publicly available information• Hong Kong Monetary Authority: https://www.hkma.gov.hk/eng/

• Countercyclical buffer (CCyB) has been reduced from 2% to 1% in response to the corona crisis.• Local regulator (HKMA) has been holding small and medium enterprises (SME) lending roundtables since November 2019 where it encourages banks to

a customer-focused attitude. This was supplemented by several public circulars that shared progress and best practices, one of them promoting a "sympathetic stance" in the treatment of customers in difficulties.

• The regulator also clarified that changes to the repayment terms of loans do not necessarily lead to a "rescheduled" or "default" status as long as the new terms are deemed to be "commercial". This clarification grants banks more flexibility in supporting customers in difficulties without causing a need for provisioning or higher capital requirements of such loans.

• A Hong Kong public development institution (HKMCI) introduced a 90% SME loan guarantee scheme in December 2019 which is now supplemented by a 100% SME guarantee program for loans to SME for covering wages and rental expenses amid declining revenues.

• The regulator clarified that guarantees from this institution normally qualify as credit risk mitigation when calculating the capital requirements and are deductible for the calculation of large exposure limits.

Reactions & measures

Information as of March 26, 2020. Non-exhaustive list; collectedby PwC network firms 7

March 26, 2020Reactions to COVID-19

PwC

Israel

Publicly available information• Bank of Israel (BOI): https://www.boi.org.il/en/Pages/Default.aspx

There's a summary of Monetary Policy and Regulatory Leniencies measures taken by the Bank of Israel (BOI) due to COVID19 epidemic until now:

Monetary policy measures:• BOI carries out open market operations and purchases in the secondary market government bonds of various types and maturities in the necessary

quantities needed to ensure the smooth functioning of the government bond market• BOI offers repo transactions to financial institutions with government bonds as collateral.• Last week, BOI transacted US$/NIS swaps with a one week maturity with the domestic banking sector, in order to supply US$ liquidity to domestic

banks. This week BOI allocated up to $15 billion for swap transactions vis-à-vis the domestic banking system, even for terms of longer than a week.

Regulatory leniencies and services to the public:• Leniencies in the repayment of mortgages, with a delay in current payment for a period of 3 months, in the restriction on all-purpose household loans

backed by a residence, ,• Increasing the credit facility for households and businesses/,small and midsized businesses/ contractors banks are permitted to unilaterally increase a

customer’s credit facility (overdraft) Leniencies for customers whose checks are returned, the Banking Supervision Department will use its authority toinstruct the banks not to restrict accounts or account holders due to checks that have been refused.

Reactions & measures

Information as of March 26, 2020. Non-exhaustive list; collectedby PwC network firms 8

March 26, 2020Reactions to COVID-19

PwC

Japan

Publicly available information• https://www.fsa.go.jp/en/ordinary/coronavirus202001/press.html• https://www.fsa.go.jp/en/ordinary/coronavirus202001/20200313.pdf• https://www.fsa.go.jp/en/ordinary/coronavirus202001/20200317.pdf• COVID-19 hotline: https://www.fsa.go.jp/en/ordinary/coronavirus202001/press.html

• JFSA and Ministry of Finance issued guidance on cash flow and lending flexibility support• In addition, JFSA is providing some flexibility on unavoidable regulatory submissions under the Financial Instruments and Exchange Act• JFSA set up a COVID-19 hotline

Reactions & measures

Information as of March 26, 2020. Non-exhaustive list; collectedby PwC network firms 9

March 26, 2020Reactions to COVID-19

PwC

Qatar

Publicly available information• Qatar Central Bank: http://www.qcb.gov.qa/English/Pages/Default.aspx

Incentives for Economic and Financial Sector:

• Provide financial and economic incentives amounting to QR 75 billion to the private sector.• Central bank to put in place a mechanism to encourage banks to postpone loan installments and obligations of the private sector with a grace period of

six months.• Central Bank to provide additional liquidity to banks operating in the country.• Qatar Development Bank to postpone the installments of all borrowers for a period of six months.• Government funds to increase their investments in the stock exchange by 10 billion riyals.…

Reactions & measures

Information as of March 26, 2020. Non-exhaustive list; collectedby PwC network firms 10

March 26, 2020Reactions to COVID-19

PwC

Singapore

Publicly available information• Monetary Authority of Singapore (MAS): https://www.mas.gov.sg/news/media-releases/2020/guidance-on-safe-distancing-measures-for-issuers-when-

conducting-meetings

• Monetary Authority of Singapore (MAS) issued an advice for operational measures to all financial institutions (FIs) in Singapore: e.g. safe distancing measures in all aspects of their business operations, reduce traffic at customer facing locations, cancel or defer all physical events

• MAS will continue to work closely with the industry to ensure that Singapore’s financial sector remains resilient and contributes to the national effort against COVID-19

• Accounting and Corporate Regulatory Authority (ACRA), MAS and Singapore Exchange Regulation (SGX RegCo) will continue to monitor the impact of COVID-19 on the capital markets, and will put in place additional measures and advisories as necessary.

Reactions & measures

Information as of March 26, 2020. Non-exhaustive list; collected by PwC network firms 11

March 26, 2020Reactions to COVID-19

PwC

South Africa

Publicly available information• South African Reserve Bank: https://www.resbank.co.za/Pages/default.aspx• Financial Sector Conduct Authority (FSCA): https://www.fsca.co.za/Pages/Default.aspx

• Interest rate cuts: 1% decreased• Payment holiday: 3 month for selected small business and student debts• Comprehensive package of inventions will be announced shortly

Reactions & measures

Information as of March 26, 2020. Non-exhaustive list; collectedby PwC network firms 12

March 26, 2020Reactions to COVID-19

PwC

South Korea

Publicly available information• Financial Services Commission (FSC): http://meng.fsc.go.kr/common/pdfjs/web/viewer.html?file=/upload/press1/20200324184742_c2e891e0.pdf• http://meng.fsc.go.kr/common/pdfjs/web/viewer.html?file=/upload/press1/20200325172926_77b3a73e.pdf

• Various initiatives to support funding to Covid affected businesses and individuals• Emergency financing support for small merchants, special guarantees for SMEs and small merchants, full amount guarantees for small businesses, debt

purchasing by KAMCO and debt adjustment, primary collateralized bond obligations (P-CBOs) • Bond market stabilization fund through capital call to financial institutions, Korea Development Bank to takeover over 80% of corporate bonds for sale to

Korea Credit Guarantee Fund which will then issue P-CBOs, stock finance loans through REPO market by the Bank of Korea, • Stock market stabilization measures: 5 financial holding companies, 18 leading financial companies and other relevant institutions including the Korea

Exchange will contribute in creating a KRW10.7 trillion stock market stabilization fund, tax support for individuals to increase demand in stock makets

Reactions & measures

Information as of March 26, 2020. Non-exhaustive list; collected by PwC network firms 13

March 26, 2020Reactions to COVID-19

PwC

USA

Publicly available information• Board of Governors of the Federal Reserve System (Fed): https://www.federalreserve.gov/newsevents/pressreleases/bcreg20200322a.htm

• Various initiatives to support funding: Term Asset-Backed Securities Loan Facility (TALF), Primary Market Corporate Credit Facility (PMCCF), Secondary Market Corporate Credit Facility (SMCCF), Money Market Mutual Fund Liquidity Facility (MMLF), Commercial Paper Funding Facility (CPFF) etc.

• Technical change to phase in automatic restrictions associated with total loss absorbing capacity (TLAC) requirements.• Encouraging banking organizations to use their capital and liquidity buffers as they respond to the challenges presented by the effects of the

coronavirus.• New bill under discussion: directs the banking agencies to reduce the community bank leverage ratio to 8% and provide a grace period for compliance

Reactions & measures

Information as of March 26, 2020. Non-exhaustive list; collectedby PwC network firms 14

March 26, 2020Reactions to COVID-19

Germany

France

Austria

Italy

Greece

Netherlands

Belgium

Poland

Click on the to get an overview of the current reactions ofthe government, central banks and (N)CAs in the respective jurisdiction

names

ECB

Finland

Ireland

Denmark

SwitzerlandHungary

Czech Republic

Europe

UK

EBA

Portugal

Sweden

Romania

PwC

ECB Banking Supervision

Publicly available information• Press release (3/12/20): https://www.bankingsupervision.europa.eu/press/pr/date/2020/html/ssm.pr200312~43351ac3ac.en.html• Press release (3/20/20): https://www.bankingsupervision.europa.eu/press/pr/date/2020/html/ssm.pr200320~4cdbbcf466.en.html• FAQ (3/20/20): https://www.bankingsupervision.europa.eu/press/pr/date/2020/html/ssm.pr200320_FAQs~a4ac38e3ef.en.html

• Further flexibility in prudential treatment of loans backed by public support measures: classification of debtors as “unlikely to pay” when banks call on guarantees granted in context of coronavirus and related public moratoriums; loans which become NPL and are under public guarantee will benefit fromprudential treatment in terms of supervisory expectations about loss provisioning; full flexibility on implementation of NPL reduction strategies

• Recommendation that all banks avoid procyclical assumptions in their models to determine provisions and that those banks that have not done this so far opt for IFRS 9 transitional rules

• Activation of capital relief measures (as announced on march 12,2020): operate below the PG2 level and frontload the rules on composition of PR2 originally scheduled to come into force 2021 with CRD V

• Operational relief measures: postpone (by six month) deadline for remedial actions imposed in the context of on-site inspections. TRIM investigations, internal model investigations, the verification of compliance with qualitative SREP measures, issuance of TRIM decisions, on-site follow up letters and internal model decisions

Reactions & measures

Information as of March 26, 2020. Non-exhaustive list; collectedby PwC network firms 16

March 26, 2020Reactions to COVID-19

PwC

European Banking Authority (EBA)

Publicly available information• EBA Statement (3/12/20): https://eba.europa.eu/eba-statement-actions-mitigate-impact-covid-19-eu-banking-sector

• The EBA has decided to postpone the EU-wide stress test exercise to 2021. This will allow banks to focus on and ensure continuity of their core operations, including support for their customers. For 2020, the EBA will carry out an additional EU-wide transparency exercise in order to provide updated information on banks’ exposures and asset quality to market participants.

• In addition, the EBA recommends competent authorities (CA) to plan supervisory activities, including on-site inspections, in a pragmatic and flexible way, and possibly postpone those deemed non-essential. CAs could also give banks some leeway in the remittance dates for some areas of supervisory reporting, without putting at stake the crucial information needed to monitor closely banks’ financial and prudential situation.

• CAs are encouraged, where appropriate, to make full use of the flexibility already embedded in the existing regulatory framework. The ECB-Banking Supervision’s decision to allow banks to cover Pillar 2 requirements with capital instruments other than common equity tier 1 (CET1) is an example. The use of Pillar 2 Guidance is another way to ensure that prudential regulation is countercyclical and banks can provide the necessary support to the household and corporate sectors.

• The liquidity coverage ratio (LCR) is also designed to be used by banks under stress. Supervisors should avoid any measures that may lead to the fragmentation of funding markets.

• The EBA highlights the flexibility in the implementation of the EBA Guidelines on management of non-performing and forborne exposures and the EBA calls for a close dialogue between supervisors and banks, also on their non-performing exposure strategies, on a case by case basis.

Reactions & measures

Information as of March 26, 2020. Non-exhaustive list; collectedby PwC network firms 17

March 26, 2020Reactions to COVID-19

PwC

Austria

Publicly available information• Österreichische Nationalbank (OeNB): https://www.oenb.at/Presse/20200323.html• Finanzmarkaufsicht (FMA): https://www.fma.gv.at/aktuelle-informationen-der-europaeischen-finanzmarktaufsichtsinstitutionen-zu-den-

herausforderungen-durch-den-corona-virus/

• 38 billion of economical aid to companies incl. postponement of taxes and social payments and a program for temporary unemployment + increased R&D budgets

• Temporarily necessary to request liquidity information at a higher frequency• Weekly overview of the liquidity situation including: Maturity Ladder, Liquidity coverage ratio (%) and, if applicable, add-on template• Extending the return period for SREP questionnaires from six to twelve weeks• Implementation of MREL requirements will be postponed

Reactions & measures

Information as of March 26, 2020. Non-exhaustive list; collectedby PwC network firms 18

March 26, 2020Reactions to COVID-19

PwC

Belgium

Publicly available information• National Bank of Belgium: https://www.nbb.be/en/articles/national-bank-fighting-economic-consequences-coronavirus-pandemic

• In the context of the Covid-19 outbreak and in view of addressing the economic consequences of the measures taken to contain the epidemic, theNational Bank of Belgium has decided to reduce the countercyclical capital buffer to 0%. In June 2019, the National Bank of Belgium had decided toincrease the countercyclical capital buffer from 0% to 0,5% as from July 1, 2020. On March 10, 2020, this decision has been reversed, releasing someEUR 1 billion capital buffers for the Belgian Banks.

• On 22 March 2020 the National Bank of Belgium, the Belgian Government and the Belgian banking federation Febelfin announced two additional measures in view of addressing the economic consequences of the measures taken to contain the epidemic:• Payment holiday: the financial sector committed to grant viable non-financial companies and self-employed people as well as mortgage loans with

overdues as a result of the Covid-19 outbreak payment holiday till 30 september 2020, without additional costs.• Guarantee scheme: the Belgian federal government activates a guarantee scheme for a total amount of EUR 50 billion for all new loans and loan

commitments up to 12 months maturity granted by banks to viable non-financial companies and self-employed people. At the end of the guaranteescheme period the incurred losses will be supported as follows:

• First 3% of losses to be supported by the financial sector; • Losses between 3% and 5% to be supported 50% by the Belgian state and 50% by the financial sector;• For the losses exceeding 5%, 80% of the losses will be supported by the Belgian state and 20% by the financial sector.

Reactions & measures

Information as of March 26, 2020. Non-exhaustive list; collectedby PwC network firms 19

March 26, 2020Reactions to COVID-19

PwC

Czech Republic

Publicly available information• Czech National Bank: https://www.cnb.cz/en/cnb-news/press-releases/CNB-adopts-stabilising-measures-in-connection-with-coronavirus-epidemic/

• Central bank decreased 2W repo rate from 2.25% to 1.75%• Revised decision (May 2019) to increase the countercyclical capital buffer rate for exposures located in the Czech Republic to 2% with effect from 1 July

2020. This means that banks will continue to maintain the currently applicable rate of this buffer at 1.75%.• Recommendation to Czech banks to postpone dividend payouts• Supervisory approach to banks' potential postponement of clients' loan instalments: The decision allowing to postpone instalments of all types of loans is

within the competence of individual banks.• Enhanced the liquidity-providing operations (introduced in October 2008). The liquidity-providing repo operations will be announced three times a week

instead of the weekly frequency

Reactions & measures

Information as of March 26, 2020. Non-exhaustive list; collectedby PwC network firms 20

March 26, 2020Reactions to COVID-19

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Denmark

Publicly available information• Finanstilsynet: https://www.finanstilsynet.dk/• PwC Denmark has also created a COVID-19 hotline and website: https://www.pwc.dk/da/covid-19.html

• Countercyclical buffer requirements have been relaxed• A bank may be allowed by the regulator to use the built-in buffer in LCR on a case by case basis if it must raise short term funds at the national bank• The regulator has commented that indication of credit deterioration does not automatically lead to placement in stage 3 from an IFRS 9 perspective• Relaxation of procedures towards potential NPEs• AGMs and annual report deadlines have been extended (subject to certain conditions)

Reactions & measures

Information as of March 26, 2020. Non-exhaustive list; collectedby PwC network firms 21

March 26, 2020Reactions to COVID-19

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Finland

Publicly available information• Financial Supervisory Authority (FSA): https://www.finanssivalvonta.fi/en/

• The FSA has clarified the preparedness of supervised entities: Supervisors have updated their continuity plans and internal guidelines. Progress of thesituation is monitored by regular working groups of supervised persons.

• First measures:• Capacity of remote connections has been increased, supervisors are aware of the importance of securing remote connections.• Critical task personnel are physically divided into teams in different locations.• Supervisors have also investigated the preparedness of their service providers.• Controllers have analyzed risk concentrations and their effects.• Decision to lower Finnish credit institutions’ capital requirements. The reduction is implemented by removing the systemic risk buffer and by adjusting

credit institution-specific requirements so that the structural buffer requirements of all credit institutions will fall by 1 percentage point, all in all.

Reactions & measures

Information as of March 26, 2020. Non-exhaustive list; collectedby PwC network firms 22

March 26, 2020Reactions to COVID-19

PwC

France

Publicly available information• Banque de France: https://www.banque-france.fr/

• At this stage measures are mainly government measures. The Banque de France should communicate specific measures this week notably the relief ofthe countercyclical buffer.

• Measures of the government:• postponement of the payment of taxes and social charges + partial unemployment• funds for very small caps• guarantees by the French state on bank loans granted to corporates in the context of Covid 19

Reactions & measures

Information as of March 26, 2020. Non-exhaustive list; collectedby PwC network firms 23

March 26, 2020Reactions to COVID-19

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Germany

Publicly available information• BaFin corona news page: https://www.bafin.de/DE/Aufsicht/CoronaVirus/CoronaVirus_node.html• BaFin press release (3/24/2020): https://www.bafin.de/SharedDocs/Veroeffentlichungen/DE/Pressemitteilung/2020/pm_200324_corona-

krise_aufsichtliche_anforderungen.html

• BaFin was involved in the decision taken by the ECB Banking Supervision (SSM) and will apply these measures also for the less significant institutions• The competent authority for setting the CCyB (Ausschuss für Finanzstabilität, ASF) announced on March 18, 2020, that the CCyB rate for exposures in

Germany would be set to 0% from April 2020 (instead of 0,25% which would have been effective from July 2020 onwards according to BaFin’sAllgemeinverfügung). This reduction will be valid at least until December 2020.

• BaFin states that a deferral is in general not to be deemed as a default according to Art. 178 CRR as long as there is no “distressed restructuring” which leads to a diminished financial obligation that exceeds the 1% threshold (see paragraph 51 of EBA Guidelines 2016/07 on the definition of default).

Reactions & measures

Information as of March 26, 2020. Non-exhaustive list; collectedby PwC network firms 24

March 26, 2020Reactions to COVID-19

PwC

Greece

Publicly available information• Bank of Greece: https://www.bankofgreece.gr/en/homepage

Supervisory measures:• Waiver of the eligibility requirements for securities issued by the Greek government is granted for purchases under ECB’s annuanced 750bn Euros

Pandemic Purchase Programme (PEPP).• Collateral standards are further eased by including claims related to the financing of the corporate sector, translating into extra liquidity for banks and the

real economy.• postponing planned on-site inspections further to the end of 2020.

Measures for mitigation of impact to debtors:• Banks as well as NPL servicers will suspend the obligation of corporations to pay principal for their loan obligations (payment of interest only) until

30.09.2020. The measure will apply to corporations operating in affected sectors that were performing (PE) as at 31.12.2019.• For individuals affected by the closure of businesses due to COVID-19 national measures, Banks will proceed to a 3-month suspension of loan

instalments to be paid by the debtors for their performing loans. These affected groups will be entitled to receive by the government a state subsidy aswell.

Reactions & measures

Information as of March 26, 2020. Non-exhaustive list; collectedby PwC network firms 25

March 26, 2020Reactions to COVID-19

PwC

Hungary

Publicly available information• Central Bank of Hungary: https://www.mnb.hu/en

Regulatory measures to help banks:• No SREP reviews until 30 September• Implementation of MREL requirements will be postponed by 6 months• Fulfillment of Systematic Risk Buffer requirements exempted until the end of the year• Payment holiday for all loans (including retail and corporate) until 31 december 2020• Interest cap for consumer loans

Reactions & measures

Information as of March 26, 2020. Non-exhaustive list; collectedby PwC network firms 26

March 26, 2020Reactions to COVID-19

PwC

Ireland

Publicly available information• Central Bank of Ireland (CBI): https://www.centralbank.ie/news/article/press-release-focused-on-protecting-consumers-and-supporting-individuals-19-march-2020

• CBI as part of the Eurosystem and SSM is including consistent wider measures with the Pandemic Emergency Purchase Programme, the temporarycapital and operational relief to banks across the Eurozone, and the release of the Counter Cyclical Capital Buffer (CCyB) from 1% to 0%, with no furtherincrease at least before the Q1 2021

• Implement a payment moratoria to three months for business and personal customers affected by Covid-19, to be followed by ongoing reviewsdepending on the scale and extent of the situation.

• The banks agree on a simplified application process to make it as easy as possible for businesses and personal customers impacted by Covid-19 toreceive support from their banks.

• The banks want to ensure that any Covid-19 application for a payment break and further reviews will not adversely impact the customer’s credit record, and the banks reporting of these facilities

• Banks will also defer court proceedings for three months.• The banking system stands ready to provide working capital support

Reactions & measures

Information as of March 26, 2020. Non-exhaustive list; collectedby PwC network firms 27

March 26, 2020Reactions to COVID-19

PwC

Italy

Publicly available information• Italian Central Bank (press release 20 March 2020): https://www.bancaditalia.it/media/notizia/extension-of-deadlines-and-other-temporary-measures-to-

mitigate-the-impact-of-covid-19-on-the-italian-banking-and-financial-system/

• Postponements, that aim to facilitate performance for Banks and supervised financial intermediaries which are currently undergoing a period of distressdue to the health emergency. Postponement includes additional 60 days for the fulfillment of the following• ICAAP/ILAAP• Recovery plan and Report of outsourced functions and activities (for Banks and financial institutions)• Report on the organizational structure (for all relevant financial institutions involved)• Self-assessment of the Depositary requirements• Anti-money laundering Report• Report on the obligations in terms of Depositary or sub-depositary

• Additional 150 days for the submission of the first Report of operational and security risks for Banks• Additional 60 days to provide answers to ongoing normative consultations, as well as, a postponement of the deadline to send observations on the

consultations that will be launched in the next days• Deadline for the submission of the NPL plan by less significant Banks has been postponed to July 30th• Flexibility on the use of P2G, CCB and LCR buffers: Bank of Italy will analyse the plan to re-align in time with the required buffers• Reprogramming its onsite inspections and evaluating the possibility to introduce flexible measures in terms of Supervisory Reports• Bank of Italy strongly recommends Banks to include the pandemic risk into their emergency plans, as well as to review their business continuity plans

Reactions & measures

Information as of March 26, 2020. Non-exhaustive list; collectedby PwC network firms 28

March 26, 2020Reactions to COVID-19

PwC

Poland

Publicly available information• Polish Financial Supervisory Authority (KNF): https://www.knf.gov.pl/en/

Authorities constituting Financial Stability Network (Polish FSA, central bank, ministry of finance, deposit insurance/resolution authority) measures are aimed at protecting financial stability, customers and markets:

• apply a flexible approach to the application of the EBA guidelines regarding past due and restructured exposures. • Change in the schedule payment shall not be treated as stage 2 / stage 3 trigger unless it is due to significant financial / economic problems of the

borrower;• flexible approach to NPL identification and restructuring suggested, as it is allowed by EBA• Reduction of the systemic buffer and possibility to reshape required capital add-ons;• Individual regulatory assessment of the liquidity buffer• Polish regulator will minimise regulatory requirements towards reporting (e.g. SREP) and inspections in order to give the banks more time for operational

activity. (however, the implementation of DoD is not postponed);• Possibility to prolong the payment deadlines for borrowers from SME and micro sectors - based on the risk assessment done not later than 30 Sept

2019

Reactions & measures

Information as of March 26, 2020. Non-exhaustive list; collectedby PwC network firms 29

March 26, 2020Reactions to COVID-19

PwC

Portugal

Publicly available information• Bank of Portugal: https://www.bportugal.pt/en/comunicado/press-release-banco-de-portugal-covid-19-response-measures

• Relaxation, on a temporary basis, on P2G, combined set of capital buffers (conservations and O-SII) and LCR• Suspension of the national Stress Testing exercise• Suspension or postponement of on-site inspections;• Rescheduling of SREP exercise;• Postponement of several reporting deadlines: funding and capital plan (to the 2nd half of the year); internal control report (to end of September),

Prevention of AML (to end of May), resolution planning (to end of May), ICAAP/ ILAAP/ IRRBB/ concentration risk reports (to end of May), specific impairment report (to end of August);

• Specific actions regarding deadlines for answers to customer complaints• Flexibilization of the requirements to open banking accounts• Beyond this BdP reinforced the need of being notified in case of major operational issues and the need of the existing business continuity plans being

activated.

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Romania

Publicly available information• Supervisory Committee of National Bank of Romania (NBR): https://bnr.ro/page.aspx?prid=17656

Measures for mitigation of impact to debtors:• Payment delays must not be associated to the financial difficulty of the debtor; the loan does not need to be reclassified, and credit institutions do not

need to allocate (additional) provision for the due amounts, as a result of restructuring.• Not being due to the borrower’s financial distress, a payment holiday due to the pandemic is not to be classified as restructuring. • A case-by-case negotiation of payment holidays which is not due to COVID 19 must still be classified as restructuring.Measures for the Financial Sector

• temporarily permission to make use of existing capital buffers established prior • Credit institutions are allowed to fall below the minimum LCR, for the purpose of using liquidity buffers to contribute to the smooth functioning of the

banking sector and ensure sufficient liquidity to firms and households. • Guidance about the manner in which the flexibility of the prudential framework can be used to reflect deferred payment measures• In the case of NBFIs entered in the General Register, the suspension or freeze of payment obligations for reasons related to Covid-19 does not involve

the build-up of overdue days for the payment of loan instalments, and does not automatically require for specific credit risk provisions to be set up.• In the case of NBFIs entered in the Special Register (under additional prudential requirements),• the restructuring of loans affected by the pandemic does not determine the reclassification of the loans into a lower risk bucket, nor, implicitly, additional

provisioning requirements.

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Sweden

Publicly available information• Riksbanken: https://www.riksbank.se/sv/press-och-publicerat/aktuellt-om-riksbanken-och-coronapandemin/riksbankens-atgarder-i-samband-med-

coronapandemin/ • Finansinspektionen: https://fi.se/sv/publicerat/coronaviruset/

Swedish FSA (Finansinspektionen): • Reduce or suspend amortisation payments (household mortgage loans), due to loss of income linked to covid-19• Lowered the countercyclical buffer rate to zero• Temporarily allow banks to fall below the liquidity coverage ratio (LCR) for individual currencies and total currencies.

Swedish central bank (Riksbanken):• Lend up to SEK 500 billion to companies via the bank• Offer loans in US dollars• Limit rules for mortgage bonds are being removed• Swedish central bank intend to buy commercial papers (SEK 300 billion)

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Switzerland

Publicly available information• FINMA (Press release of 19 March 2020: "Corona crisis: FINMA sees banks well prepared, operationally and financially"):

https://www.finma.ch/fr/news/2020/03/20200319-mm-corona/• Swiss National Bank (SNB) (Monetary policy assessment of 19 March 2020):

https://www.snb.ch/en/mmr/reference/pre_20200319_2/source/pre_20200319_2.en.pdf

• FINMA is taking a risk-oriented and countercyclical approach to its supervisory work. Certain deadlines and routine control activities may therefore bepostponed so that the companies can use their management capacity more flexibly.

• SNB maintains expansionary monetary policy, raises negative interest exemption threshold, and is examining additional steps. It is keeping the SNB policy rate and interest on sight deposits at the SNB at −0.75%.

• The SNB will take additional steps to ensure liquidity as necessary. It is also providing liquidity as part of the extended swap arrangements with othercentral banks, particularly in US dollars.

• To strengthen the banks in this role, the SNB is raising the exemption threshold as of 1 April 2020, thus reducing the negative interest burden on thebanking system. The threshold factor will increase from 25 to 30.

• crisis support via interest free loans - up to half a million - processed by CH banking industry and granted by CH, further support for partially granted by CH (85%) for fixed rate

• requesting the countercyclical capital buffer be reduced to 0% with immediate effect.• FINMA temporarily (until 1 July 2020) allow the banks to calculate the leverage ratio without central bank reserves.• Capital and liquidity buffers are there to be used and FINMA will deliver the appropriate forbearance to ensure that that will be the case.• FINMA additionally recommends that boards consider carefully the level of upcoming dividend distributions

Reactions & measures

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The Netherlands

Publicly available information• De Nederlandsche Bank (DNB), press release (17 March 2020): https://www.dnb.nl/en/news/news-and-archive/persberichten-2020/dnb387870.jsp

• Allow LSIs to temporarily operate below the level of capital as defined by the Pillar 2 Guidance (P2G) and the capital conservation buffer (CCB), and operate below LCR level.

• LSIs: P2R can partially be met by capital instruments that do not qualify as CET1 capital. The P2R does no longer need to be composed entirely out of CET1 capital, but can be a reflection of the minimal capital composition under Pillar 1 requirements, being at least 56.25% CET1, 18.75% Additional Tier 1 instruments (AT1) and 25% Tier 2 instruments.

• DNB still expects LSIs to immediately notify DNB of early warning signals, including if it is expected that the institution will fail to meet the P2G.• DNB may adjust prudential timetables, processes and deadlines on a case-by-case basis, depending on individual circumstances. DNB is however not

planning to adjust essential data requests to monitor current developments, such as the daily liquidity monitoring requests, or any data DNB is required to request under law on this.

• Reduce systemic risk buffer requirements for the three largest banks (ING, Rabobank and ABN AMRO), from 3% to respectively 2.5%, 2% and 1.5%. Hence, no reduction for BNG and de Volksbank, for which the buffer requirement remains at 1%.

• DNB postpones the implementation of the risk weight floor requirements for residential mortgages loans, which was expected to be implemented in 2020.

• DNB has informed LSIs (i.e. banks not directly supervised by the ECB) that DNB will follow the measures announced by the ECB.• DNB may, allow, on a case-by-case basis for some temporary relaxation of asset encumbrance limits.

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UK

Publicly available information• Financial Conduct Authority (FCA): https://www.fca.org.uk/firms/information-firms-coronavirus-covid-19-response• Bank of England (BoE): https://www.bankofengland.co.uk/news/2020/march/boe-measures-to-respond-to-the-economic-shock-from-covid-19

• Reduction of the UK countercyclical buffer (CCyB) rate to 0% of banks’ exposures to UK borrowers, with immediate effect• All elements of banks’ capital and liquidity buffers can be drawn down as necessary to support the economy through this temporary shock• Supervisory expectation that banks should not increase dividends or other distributions, such as bonuses, in response to policy actions.• Extending the closing date for responses to open consultations and calls for input until 1 October 2020• Operational resilience: reviewing firms’ contingency planning, including firms’ assessments of operational risks, ability to continue to operate effectively,

and the steps firms are taking to serve and support their customers.

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More information and contacts

• Regulatory updates: https://blogs.pwc.de/regulatory/

• PwC Basel IV Channel on Youtube: https://www.youtube.com/channel/UCosEew32vLFgApuGR048bBg

• Your global contact: https://www.pwc.com/gx/en/services/advisory/basel-iv/territory-leads.html

Information as of March 26, 2020. Non-exhaustive list; collectedby PwC network firms 36

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