Brussels 28 April 2020 - The EACB (European Association of Co-operative Banks) welcomes the package of temporary measures presented today by the European Commission, aiming to ensure that a steady credit flow can be channelled to the real economy while keeping banks’ capital base sound. It consists of a proposal for a regulation to amend the CRR and an interpretative communication. “The measures proposed today will help expand banks’ ability to lend to the real economy during these times of stress. In our view, they are a very important contribution to stabilizing the corporate sector, especially SMEs, in the current COVID-19 crisis” emphasized Mr. Gerhard Hofmann, EACB President.
The selected targeted measures included in the proposed regulation largely provide for earlier implementation of elements provided under the 2019 Banking Package (e.g. to promote SME financing) or take up recent policy directions agreed at Basel level. The Communication on a “Banking package to facilitate lending to households and businesses in the EU” indicates a path for banks and supervisors to use existing leeway in the current regulatory framework, e.g. in the area of accounting standards, the recognition of the effect of payment moratoria, the treatment of NPLs.
The European cooperative banks appreciate that the Commission recognises that banks in the EU are today much more resilient than at the onset of the financial crisis in 2008 and that this relative strength would see them best placed to play a key role to support the economy. However, given the unprecedented scale of the efforts expected in financing the EU economy to ensure a timely recovery, additional regulatory aspects should be considered to ensure that the risk build up associated with the credit process do not place banks under further supervisory and regulatory stress once the most acute phase of the crisis has subsided.
"Indeed, it remains necessary that even during an accelerated legislative process with tighter timelines and procedures – some further urgent elements may be addressed and integrated." added Mr. Hofmann. “EACB members see a need, for instance, for adjustments in the area of resolution requirements, where recalibrations in the area of TLAC/MREL calculation and Single Resolution Fund contributions appear necessary. Otherwise, conflicts between the goals of monetary policy, liquidity supply, and governmental programmes on one side and regulatory requirements on the other would arise”.