26.06.2020

Regulation (EU) 2020/873 of the European Parliament and of the Council of 24 June 2020 amending the amended Capital Requirements Regulation (CRR) as regards certain adjustments in response to the COVID-19 pandemic was published in the Official Journal of the EU and entered into force on the following day. The regulation, first proposed by the European Commission on 28 April 2020, contains exceptional temporary measures, such as,

  1. ‘re-starting’ the transitional arrangements to alleviate the impact on own funds from expected credit loss provisioning under IFRS 9;
  2. temporarily extending the minimum loss coverage treatment that is currently applicable to non-performing exposures (NPEs) guaranteed or insured by export credit agencies to those NPEs arising because of the COVID-19 pandemic and covered by the various (national) guarantee schemes;
  3. modification of the offsetting mechanism associated with the competent authorities’ discretion to allow credit institutions to temporarily exclude exposures in the form of central bank reserves from the calculation of the leverage ratio;
  4. deferral of the application date of the new leverage ratio buffer requirement for global systemically important banks by one year to 1 January 2023;
  5.  bringing forward the application date (to the date of entry into force of the relevant regulatory technical standards) of the provisions on the capital benefits treatment of certain software assets envisaged in the CRR; an;
  6. immediately applying (that is, with entry into force of the proposed amending regulation) some of the capital benefits envisaged in the CRR but not yet applicable:
    - the provisions on certain loans backed by pensions or salaries,
    - the revised supporting factor for small and medium enterprises, and
    - the new supporting factor for infrastructure finance.
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