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COVID-19 - Impact on Financial Sector - 4 May 2020

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04/05/2020

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

 

30/04/2020

State aid: Commission approves guarantee scheme of up to €530 million to support the Walloon economy in coronavirus outbreak

The European Commission has approved a Belgian scheme of up to €530 million, financed by the Walloon region, to support companies in the context of the coronavirus outbreak through  guarantees. The scheme was approved under the State aid Temporary Framework adopted by the Commission on 19 March 2020, as amended on 3 April 2020.
 
Belgium notified to the Commission under the Temporary Framework a loan guarantee scheme to support companies active in the Walloon region and affected by the coronavirus outbreak. The measure, with an overall volume of guarantees to be issued of €530 million, aims at limiting the risk associated with issuing or restructuring loans to those companies that are most severely affected by the economic impact of the coronavirus outbreak, ensuring the continuation of activities.
 
In line with the conditions set out in the Temporary Framework, (i) the underlying loan amount per company is limited to what is needed to cover its liquidity needs for the near future, (ii) the guarantee fees and interest rates are in line with the minimum levels laid down in the Temporary Framework, (iii) the guarantees and loans will be provided until the end of this year, with a maximum duration of six years, and (iv) aid may be granted only to companies that were not in difficulty already on 31 December 2019 buy were significantly affected by the coronavirus outbreak.

The Commission concluded that the measure is necessary, appropriate and proportionate to remedy a serious disturbance in the economy of a Member State, in line with Article 107(3)(b) TFEU and the conditions set out in the Temporary Framework.

     
30/04/2020

ECB announces new pandemic emergency longer-term refinancing operations

The Governing Council of the European Central Bank (ECB) today decided to conduct a new series of seven additional longer-term refinancing operations, called pandemic emergency longer-term refinancing operations (PELTROs). These operations will provide liquidity support to the euro area financial system and contribute to preserving the smooth functioning of money markets by providing an effective backstop after the expiry of the bridge longer-term refinancing operations (LTROs) that have been conducted since March 2020.

Counterparties participating in PELTROs will be able to benefit from the collateral easing measures in place until the end of September 2021 that were announced by the Governing Council on 7 and 23 April 2020.

     
30/04/2020

ECB recalibrates targeted lending operations to further support real economy

The Governing Council of the European Central Bank (ECB) today decided on a number of modifications to the terms and conditions of its targeted longer-term refinancing operations (TLTRO III) in order to support further the provision of credit to households and firms in the face of the current economic disruption and heightened uncertainty.

Important aspects are: 

  • interest rate on all targeted longer-term refinancing operations (TLTRO III) will be reduced by 25 basis points to -0.5% from June 2020 to June 2021;

  • for banks meeting the lending threshold of 0% introduced on 12 March 2020, the interest rate can be as low as -1%; and

  • the start of the lending assessment period is brought forward to 1 March 2020.

     
30/04/2020

EIOPA revises its timetable for advice on Solvency II Review until end December 2020

EIOPA, in close coordination with the European Commission, has decided to deliver its advice to the European Commission at end December 2020, to take into account the importance of assessing the impact of the current Covid-19 situation on the Solvency II Review.

The new timing will allow an update of the holistic impact assessment in view of the impact of the pandemic on the financial markets and insurance business and to take that impact into account in EIOPA’s advice. The new timing strikes a balance between the need to use the opportunity of reviewing the Solvency II directive and the need for the advice to reflect recent developments. 


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