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BPFI welcomes European Commission proposal to amend EU banking rules to assist banks in provision of credit to the economy

28th April 2020

Banking & Payments Federation Ireland (BPFI) Chief Executive, Brian Hayes, has welcomed today’s proposal by the European Commission to amend EU banking rules in order to assist banks in the provision of credit to the economy at this vital time.

Speaking after the publication of the legislation, Mr Hayes said: “The European Commission has shown that it is willing to take swift and decisive action to ensure that current rules do not negatively impact the banking sector’s ability to continue lending to households and businesses at this critical time.

“In particular, the proposal to introduce more favourable capital rules for SME and infrastructure lending is welcomed. At the same time, we also welcome the move to amend the existing accounting rules which aims to ensure that Europe is in line with other jurisdictions and more importantly, that our banks are not forced to set aside large amounts of capital that could otherwise be lent to businesses and consumers”.

In conclusion he said: “It is now crucial that these rules are adopted by the EU institutions so that the sector has complete certainty during this volatile period”.

 

 

Note to the editor:

Today’s proposal by the European Commission amends the EU’s Capital Requirements Regulation (CRR) and follows the actions of other jurisdictions like the US and Switzerland who have recently made similar changes to their respective frameworks as a consequence of COVID-19.

One of the main areas where the Commission has looked to amend is around the treatment of lending to SMEs and Infrastructure projects, by assigning lower capital requirements on banks for these exposures. These changes were already agreed in the EU in 2019 but will now enter into force earlier.

In addition to this, the EU executive body has sought to align EU rules with what the Basel Committee on Banking Supervision (BCBS) has recently advised authorities to do around the treatment of accounting rules. Specifically, the global standard setter for banking regulation has urged regulators to amend how significant credit events should be dealt with during this current crisis due to its exogenous nature. It suggests that banks should be allowed to off-set Expected Credit Losses (ECL) against common equity for a period of time before having to set aside capital against loans.

Another one of the key proposals aims to provide loans that are backed by state guarantees with more favourable capital treatment if they become non-performing.

 

About: Banking & Payments Federation Ireland (BPFI) represents the banking, payments and fintech sector in Ireland.  Together with its affiliates, the Federation of International Banks in Ireland and the Fintech & Payments Association of Ireland, BPFI has 100 member institutions and associates, including licensed domestic and foreign banks and institutions operating in the financial marketplace here.

Contact: For further information contact Jillian Heffernan, Head of Communications, jillian.heffernan@bpfi.ie  087 9016880

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