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COVID-19 - Impact on Financial Sector - 15 April 2020

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15/04/2020

Please find below a summary of COVID-19 developments relevant to our clients; these alerts are dedicated to following up on the financial  regulators’ responses to the crisis. We have also created a COVID-19 Resource Center to offer legal and business insights as this crisis continues to evolve. We wish you and your loved ones well.

If you have any questions please feel free to contact: 

Tom Van Dyck
+32 475 90 90 91
t.vandyck@liedekerke.com

Freya Mareels 
+32 475 25 11 50
f.mareels@liedekerke.com

Wim Dedecker
+32 491 36 03 99
w.dedecker@liedekerke.com

 

14/04/2020

Royal decree of 14 April 2020 granting a state guarantee for certain credits in the fight against the effects of the coronavirus

Today, the Royal decree granting a state guarantee for certain credits in the fight against the effects of the coronavirus was published in the Belgian Official Gazette. It partially implements the agreement between the NBB, Febelfin and the federal government of 22 March 2020.

More specifically, the Royal decree provides for a state guarantee on credits with a maximum duration of 12 months, granted by credit institutions between 1 April 2020 and 30 September 2020. It only applies to new credits, as i.a. refinancing and amendments to existing credit agreements fall outside its scope.

Further, if the conditions are fulfilled, such credit agreement will automatically be covered by the state guarantee, as the latter applies on the level of the entire loan portfolio per credit institution. Any losses will be calculated and covered on the level of this loan portfolio, not on an individual level. Pursuant to the abovementioned agreement of 22 March 2020, the losses will subsequently be divided between the credit institution and the federal government, meaning that the state guarantee will not cover all losses.

     
15/04/2020

FSMA sets up call center for questions about coronavirus measures

The FSMA has opened a call center for anyone with questions about the various measures taken to help mitigate the impact of the COVID-19 pandemic, such as the postponement of mortgage payments, of tax payments and of the payment of insurance premiums and of contributions to second-pillar pension plans.

The call center can be contacted as from today either in writing via a contact form or by telephone every business day between 8 a.m. and 6 p.m. via the telephone numbers published on the FSMA website.

     
15/04/2020

 

FSMA COVID-19: Cybersecurity

 

The FSMA wishes to draw attention to the need for increased vigilance with regard to the vulnerability of the financial sector to cyber-attacks following the current COVID-19 pandemic, as companies had to activate their business continuity plan and introduce new methods to make remote working possible.

To this end, the FSMA invited UCI management companies, asset management and investment advice companies and crowdfunding platforms to complete a "Cybersecurity" checklist.

     

14/04/2020

EU banks sail through the Corona crisis with sound capital ratios

EBA has published its quarterly Risk Dashboard covering Q4 2019 data. Ahead of the COVID-19 pandemic, EBA concluded that: 

  • EU banks’ capital ratios have increased in Q4 2019 as the CET1 ratio reached 14,8% on a fully loaded basis. Moreover, the leverage ratio also increased, reaching 5.5% on a fully loaded basis;
  • Asset quality improved further, with the ratio of NPLs declining to 2.7%. Moreover, the coverage of NPLs improved slightly to 44.7%. IFRS 9 related figures also showed an improvement as the share of stage 2 assets declined to 6.8% and the share of stage 3 assets declined to 3.1%;
  • The return on equity worsened as it declined to 5.8% (which is well below the EU/EEA banks’ average cost of equity).

It is important to note that the Risk Dashboard’s Q4 2019 data does not reflect the impact from the COVID-19 pandemic. Consequently, the reported capital ratios do not fully reflect the recent decisions taken by banks to suspend dividends or other types of distributions.

     
10/04/2020 Circular CSSF 20/740 - Financial crime and AML/CFT implications during the COVID-19 pandemic

The CSSF has published a new Circular to provide guidance on the money laundering and terrorism financing risks and the anti-money laundering and counter-terrorism financing implications of the COVID-19 pandemic.

To avoid that criminals and terrorists may seek to exploit temporary weaknesses in the anti-money laundering and counter-terrorism financing controls, the CSSF requires supervised professionals to put in place and maintain effective systems and controls to ensure that the financial system is not abused for money laundering and terrorism financing purposes.

The Circular is structured as follows: 

  • Section 1 sets out several new and emerging money laundering and terrorism financing threats resulting from the COVID-19 pandemic;
  • Section 2 sets out the possible areas of particular vulnerability for the financial sector;
  • Section 3 provides more information on the mitigating actions; and
  • Section 4 outlines the CSSF’s approach to anti-money laundering and counter-terrorism financing supervision during this period.


Copyright - Please do not quote without permission. Please note that this alert is not a legal advice.