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COVID-19 - Impact on Financial Sector - 2 June 2020

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02/06/2020

Please find below a summary of  COVID-19 developments of last week (25/5 until 29/5 included); 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

 

27/05/2020

Law of 27 May 2020 on consumer credit, in order to help borrowers of such credits to weather the crisis caused by the coronavirus

The Law of 27 May 2020 on consumer credit, in order to help borrowers of such credits to weather the crisis caused by the coronavirus was published in the Belgian Official Gazette on Friday 29 May 2020. This Law foresees in several measures intended to help borrowers of consumer credits to weather the crisis caused by the coronavirus. The measures can be summarized as follows: 

  • a deferral of the repayment of consumer credits may be granted during the period between 1 May and 31 July 2020. The deferrals may be granted for a period of maximum three months (which can be renewed once) but only if certain conditions are fulfilled. Moreover, such deferrals will not give rise to costs or penalties

  • a deferral of the repayment of mortgages with a movable purpose may be granted during the period between 1 May and 31 July 2020. The deferrals may be granted for a period of maximum three months (which can be renewed once) but only if certain conditions are fulfilled. Moreover, such deferrals will not give rise to costs or penalties. 

This law, and the measures announced in it, entered into force on 1 May 2020 and will expire on 31 January 2021.

     
29/05/2020

Coronamonitor: almost 250,000 delay payment credit

Febelfin has published an update of its coronamonitor to illustrate the updated figures on mortgage and corporate credit deferral payments, as well as the latest evolution of new loans, contactless payments, cash withdrawals and card payments in physical outlets.

     
29/05/2020

Newsletter: FAQs for Intermediaries and Credit Providers - COVID-19

 

With these FAQs, the FSMA provides answers to specific questions received from intermediaries and credit providers regarding the impact of the COVID-19 pandemic on their business. These FAQs are addressed to the following entities: 

  • insurance, reinsurance and ancillary insurance intermediaries;

  • intermediaries in banking and investment services;

  • intermediaries and credit providers of mortgage loans;

  • intermediaries and credit providers of consumer loans.

The FAQs provide more information on the documents to be submitted with the registration application, the possible extension of the deadlines imposed for completing the registration application, the training requirements, the handling of registered letters, the entry into force of the new professional knowledge examination system, the calculation of professional experience and the referral of clients to the FSMA's COVID-19 call center.

The FAQs can be consulted here and are of an evolving nature. The FSMA may therefore update them in function of the evolution of the COVID-19 pandemic and of the measures taken in this context.

     
28/05/2020

FAQ on the consequences of the coronavirus crisis on supplementary pensions

With these FAQs, the FSMA addresses the consequences of the COVID-19 pandemic for supplementary pensions and the associated death cover. The FAQs provide: 

  • information for employees affiliated to the supplementary pension plan of their employer or professional sector;

  • information on the free supplementary pension for employees;

  • information for employers;

  • information for the self-employed.

     
28/05/2020

COVID-19: distance contracts relating to investment services and insurance distribution

 

The FSMA has published a memorandum to highlight the impact the COVID-19 pandemic may have on distance contracts relating to investment services and insurance distribution. This memo sets out the specific regulations applicable to the remote provision of investment services and insurance distribution activities.

     
27/05/2020

Belgians trade up to five times as many shares during the coronavirus crisis

The COVID-19 crisis has led to significant stock market fluctuations. In the light of these fluctuations, the FSMA conducted a quantitative study of the behaviour of Belgian private individual investors. After this study, which was based on the MiFIR transaction reports, the FSMA concluded that: 

  • the  purchase and sale of shares increased significantly during the crisis period and more shares were purchased than sold;

  • young investors (between 18 and 35 years of age) were much more active during the crisis period;

  • infrequent investors (maximum five transactions in the two years before the crisis period) bought many more BEL20 shares during this period.

     
29/05/2020

EBA sees considerable achievements in supervisory convergence and good level of engagement in supervisory colleges across the EU

EBA has published its Report on convergence of supervisory practices in 2019. Overall, EBA has concluded that the key topics for supervisory attention identified in the EBA 2019 convergence plan have been largely implemented in supervisory work across the EU. 

This Report also incorporates the 2020 convergence plan, which identified five key topics for supervisory attention for 2020: ICT risk and operational resilience, loan origination standards, profitability, capital and liability management and money laundering and terrorism financing risk and other conduct risk for prudential supervisors. 

These topics have become even more relevant in the context of this COVID-19 pandemic. The plan makes reference to the significant supervisory efforts and resources that will be dedicated to monitoring the crisis preparedness of institutions in 2020 and further implications of COVID-19 on credit institutions` operations and financial soundness.

     
25/05/2020

COVID-19 is placing unprecedented challenges on EU banks

EBA has published a preliminary assessment of the impact of COVID-19 on the EU banking sector. EBA concluded that: 

  • Banks have entered the COVID-19 crisis with  larger capital and liquidity buffers compared to previous crises;

  • the COVID-19 crisis is expected to have a negative impact on asset quality which may have an impact on their profitability;

  • Banks have been using their liquidity buffers and are expected to continue using them in the coming months;

  • Banks’ operational resilience is under pressure due to the handling of large volumes of applications for debt moratoria and guaranteed loans, and the insufficient preparation of some offshore units to work remotely.

     
26/05/2020

Pandemic increases risks to financial stability

 

According to the ECB’s May 2020 Financial Stability Review,  the COVID-19 pandemic has greatly amplified existing vulnerabilities of the financial sector, corporates and sovereigns. 

Banks should benefit from the action of prudential authorities across the euro area to ease capital requirements and grant banks more operational flexibility to maintain the flow of credit to the economy. In addition, the ECB recommended that banks temporarily refrain from paying dividends or buying back shares, strengthening their capacity to absorb losses and avoid deleveraging. These capital measures are expected to remain in place until the economic recovery is well established.

     
29/05/2020

IOSCO encourages issuers’ fair disclosure about COVID-19 related impacts

 

IOSCO has published a Public Statement on Importance of Disclosure about COVID-19, in which it: 

  • repeats the importance of disclosure of the impact of the COVID-19 pandemic on the financial statements;

  • highlights the importance of transparent and complete disclosures;

  • restates that in the current environment, it is important that issuers are mindful of the elements of reliable and informative non-GAAP measures.

     
28/05/2020

 

IOSCO consults on outsourcing principles to ensure operational resilience

 

IOSCO is requesting feedback on proposed updates to its Principles on Outsourcing by regulated entities. The consultation period will end on 1 October 2020. 

The IOSCO Board has decided to publish this Consultation Report now due to the fact that the outbreak of COVID-19 has highlighted the need to ensure resilience in operational activities and to maintain business continuity in situations where both external and often unforeseen shocks impact both firms and their service providers.


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