Law360 is providing free access to its coronavirus coverage to make sure all members of the legal community have accurate information in this time of uncertainty and change. Use the form below to sign up for any of our weekly newsletters. Signing up for any of our section newsletters will opt you in to the weekly Coronavirus briefing.
Sign up for our Financial Services UK newsletter
You must correct or enter the following before you can sign up:
Thank You!
Law360, London (August 11, 2020, 4:12 PM BST) -- Europe's top banking watchdog published new guidelines Tuesday telling banks how the series of emergency regulatory measures adopted to help firms deal with the COVID-19 pandemic will affect their reporting and disclosure requirements.
The European Banking Authority set out new rules for how banks and lenders should report their credit risk, market risk, own funds, leverage ratio and disclosure of leverage ratio amid the financial fall-out of the COVID-19 crisis.
The EBA said it adjusted regulatory requirements amid the pandemic that were "intended to enhance credit flows to companies and households, thereby supporting the EU's economy."
The new guidelines instruct banks on how to meet their reporting and disclosure obligations under EU law while the relaxed measures are in place.
The guidelines will take effect from Aug. 11 and will remain in place until May 31, 2021.
The watchdog said it chose not to engage in any public consultation on the rules due to the urgency of the matter and the need to provide credit institutions with the maximum time possible to prepare themselves for this additional reporting and disclosure requirement.
The European Commission put forward the measures, known as the "quick fix" package, in April to grant temporary relief from some bank capital rules to encourage lending to companies and households hit by the coronavirus pandemic.
The motion to loosen the Capital Requirements Regulation, or CRR, passed by a landslide in the European Parliament in June, with 502 votes to 169 and 17 abstentions.
The loosened measures will allow banks to pump money into the economy during the spread of COVID-19, the commission said.
Under the CRR, banks are forced to maintain sufficient reserves of capital to allow them to withstand market shocks. Stricter rules compelling larger banks to meet a binding leverage ratio of 3% on their balance sheets, in a bid to avoid allowing excessive debt to pile up in the financial system, have been deferred until 2023.
The package also includes measures aimed at reducing the amount of money banks have to have on hand for nonperforming loans if these are guaranteed by national governments and brings forward plans to encourage lending to small businesses.
Pensioners or employees with a permanent contract will also be able to get a loan under more favorable prudential conditions. The loan will be backed by the borrower's pension or salary.
--Additional reporting by Joanne Faulkner and Najiyya Budaly. Editing by Rebecca Flanagan.
For a reprint of this article, please contact reprints@law360.com.
