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COVID-19 - Impact on Financial Sector - 23 April 2020

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23/04/2020

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

 

22/04/2020

MoU between Assuralia, Credendo ECA and private credit insurance companies on government reinsurance for short-term trade credits

This protocol agreement provides for a government reinsurance program for policyholders domiciled in Belgium and insured with a credit insurance company active in Belgium. The credit insurance companies will undertake to keep the credit limits that have actually been utilised in the 12 months prior to 1 March 2020 intact as much as possible until the end of 2020.

The protocol agreement was concluded through the mediation of the NBB, under condition precedent of obtaining the approval of the European Commission.

     
22/04/2020

EBA provides further guidance on the use of flexibility in relation to COVID-19 and calls for heightened attention to risks

The EBA proposes, in order to alleviate the impact of the high volatility on the prudential requirements for market risk, to adjust the capital impact by amending its standards on prudent valuation. 

In particular, the EBA is proposing to:

  • introducing a 66% aggregation factor to be applied until 31 December 2020 under the so-called ‘core approach’;
  • delaying the reporting for the first FRTB-SA figures to September 2021;
  • using the flexibility in the prudential requirements available to competent authorities for banks using internal VaR models.

The EBA also provides further clarity on the prudential application of the definition of default and forbearance, and how the EBA Guidelines on legislative and non-legislative moratoria on loan repayments apply to securitisations.


Finally, the EBA recognises the need for a pragmatic approach to SREP assessments in 2020, focusing on the most material risks and vulnerabilities driven by the crisis.

     
22/04/2020

 

ECB takes steps to mitigate impact of possible rating downgrades on collateral availability

 

The ECB has adopted temporary measures to ensure that banks have sufficient assets that can be mobilised as collateral with the Eurosystem to participate in the liquidity-providing operations and to continue providing funding to the euro area economy.

Concretely, the ECB will grandfather, as long as the ratings remain above a certain credit quality level, the eligibility of marketable assets and the issuers of such assets that fulfilled minimum credit quality requirements on 7 April 2020 in the event of a deterioration in credit ratings decided by the credit rating agencies accepted in the Eurosystem.


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