European Parliament Approves CRR “Quick Fix” to Mitigate Economic Consequences of COVID-19
The measures grant relief for EU banks to enhance bank lending to companies and households.
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On 18 June 2020, the European Parliament approved the so-called CRR “quick fix” to Regulation (EU) 575/2013 (Capital Requirement Regulation (CRR)) and Regulation 2019/876 (Capital Requirement Regulation 2 (CRR2)) to mitigate the economic consequences of COVID-19. The temporary measures are, inter alia, intended to enhance credit flows to companies and households, thereby supporting the EU’s economy.
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The key changes include:
- More favorable prudential treatment of SME and infrastructure exposures as well as loans to pensioners and employees (with a permanent contract) backed by the borrower’s pension or salary. The changes would have been implemented under CRR2 middle of next year anyway and are now implemented early.
- Guarantees provided in the context of the COVID-19 pandemic by national governments or other public entities will be treated more favorably for purposes of minimum coverage requirements under the CRR.
- The application of the leverage buffer requirement for globally systemically important institutions, implemented by CRR2, is deferred by one year to 1 January 2023.
- The transitional arrangements for mitigating the impact on own funds of the introduction of IFRS 9 have been extended by two years.
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