Home > News > COVID-19 - Impact on Financial Sector - 8 April 2020
Print pageprint Stay Informedprint

NEWS

COVID-19 - Impact on Financial Sector - 8 April 2020

calendar_new
08/04/2020

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

 

8/04/2020

COVID-19: Council gives go-ahead to further use of cohesion resources

EU ambassadors have agreed on the Council’s position on a second package of measures aimed at freeing up more money from EU structural funds for crisis-related operations. The main new element of the proposal, called the Coronavirus Response Investment Initiative Plus, is that it offers additional flexibility on the use of structural funds so that Member States will be able to transfer money between different funds to meet their particular requirements.

In order to allow resources to be redirected to regions adversely affected by the COVID-19 crisis, the new measures also temporarily remove the existing conditions on which regions are entitled to receive support.

Finally, as a temporary and exceptional measure, Member States may also request up to 100% financing from the EU budget between 1 July 2020 and 30 June 2021 for programs dealing with the impact of the COVID-19 pandemic.

Once the European Parliament has agreed with the new measures, the Council is expected to adopt the measures by written procedure.

     
8/04/2020

FSMA: COVID-19: information for collective investment undertakings

 

In light of the current COVID-19 pandemic, the FSMA has clarified that it is prepared to show, to the extent possible, the necessary flexibility in the practical application of the legal rules and will refrain, in the coming weeks, from undertaking any initiative which could make the operation of the UCIs subject to its supervision more cumbersome.

Moreover, in line with the easing of restrictions by supervisory authorities in neighboring countries, the FSMA wishes to underline that regulatory initiatives with regard to liquidity tools are also being taken in Belgium. More precisely, the FSMA has stated that the government may take the initiative: 

  • to temporarily facilitate the use of swing pricing, anti-dilution levy or redemption gates when the current fund documentation do not yet include the possibility to use these liquidity tools;
  • to temporarily reduce the calculation frequency of the NAV for certain UCI without needing to modify the legal documentation when they are experiencing operational issues due to the Covid-19 pandemic;
  • to facilitate the procedures for convening UCI bodies from a distance as physical board meetings and meetings of shareholders are currently not possible. In this respect, the FSMA has also clarified that it is of the opinion that a meeting held entirely by video or telephone conferencing can be equated to a "physical" meeting, since in such a case a contradictory debate is possible. Moreover, the FSMA encourages regular digital board meetings to closely monitor the situation in the current crisis conditions;
  • to postpone the deadlines for the publication of annual reports.

 

Finally, the FSMA takes this opportunity to stress that if the operation of the UCI raises significant problems (e.g. in terms of continuity, liquidity, ...) and exceptional measures are necessary, this must be notified to the FSMA immediately.

     
7/04/2020

Online safety in corona times: Febelfin launches researh

 

Scam artists exploit the coronavirus and the current quarantine measures to trick and rob people online. As a result, there are a lot of false messages circulating that advertise mouth masks and hand gels, ask for donations to hospitals or tell people that the coronavirus has supposedly been diagnosed to a loved one.

Febelfin would like to gain an insight into the scope of the phenomenon and the impact this has on Belgian online habits. Therefore, Febelfin is launching a public survey together with research agency Indiville and online panel Bpact. In this survey, the following questions are explored:

 

  • the online behavior (working, buying, banking,…) during the quarantine period
  • the online feeling of security
  • getting in touch with phishing
  • confidence in digital banking
     
7/04/2020

The National Bank of Belgium urges insurers to temporarily suspend their dividend payments.

 

In line with EIOPA's recommendations, the NBB strongly urges Belgian (re-)insurance companies to temporarily suspend all discretionary dividend payments and share buy-backs until at least 1 October 2020. Furthermore, the NBB calls for a prudent and conservative approach regarding variable remuneration and profit-sharing. The variable part of the remuneration should be set at a prudent level and deferral should be considered as long as the financial and economic impact of the COVID-19 pandemic is not clear.

     
8/04/2020

EBA updates impact of the Basel III reforms on EU banks’ capital and compliance with liquidity measures

 

EBA published two Reports regarding the impact of implementing the final Basel III reforms and the current implementation of liquidity measures in the EU. As the Reports are based on June 2019 reporting date, these results do not reflect the economic impact of the COVID-19 pandemic on the participating banks.

In its Basel III monitoring Report, EBA estimates that the Basel III reforms, once fully implemented, would determine an average increase by 16.1% of EU banks' Tier 1 minimum required capital.

 In its update of the EBA Report on liquidity measures, EBA concluded that EU banks have continued to improve their compliance with the liquidity coverage ratio and found that the liquidity coverage ratio of EU banks stood at around 147% on average in June 2019.

     
7/04/2020

ECB announces package of temporary collateral easing measures

 

The Governing Council of the ECB has adopted a package of temporary collateral easing measures to facilitate the availability of eligible collateral for Eurosystem counterparties to participate in liquidity providing operations. This package is complementary to other measures recently announced by the ECB, including additional longer-term refinancing operations and the Pandemic Emergency Purchase Programme. -This emergency collateral package contains the following three main features:

  • Firstly, a decision has been taken on a set of collateral measures to facilitate an increase in bank funding against loans to corporates and households. This will be achieved by expanding the use of credit claims as collateral and temporarily extending the ACC frameworks;
  • Secondly, the Governing Council adopted the following temporary measures:
 
    • A lowering of the level of the non-uniform minimum size threshold for domestic credit claims for EUR 25,000 to EUR 0;
    • An increase, from 2.5% to 10%, in the maximum share of unsecured debt instruments issued by any single other banking group in a credit institution’s collateral pool;
    • A waiver of the minimum credit quality requirement for marketable debt instruments issued by the Hellenic Republic for acceptance as collateral in Eurosystem credit operations.
 
  • Thirdly, the Governing Council decided to temporarily increase its risk tolerance level in credit operations through a general reduction of collateral valuation haircuts by a fixed factor of 20%.


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