Basel Committee on Banking Supervision Announces Further Measures to Alleviate COVID-19 Impact

The Basel Committee on Banking Supervision has announced a series of measures designed to reduce the impact of COVID-19 on the global banking sector. The latest measures are designed to facilitate bank lending to the real economy and boost banks’ operational capacity to the financial strain of COVID-19. They follow the extension to Basel III implementation deadlines announced by the Group of Central Bank Governors and Heads of Supervision on March 27, 2020.

In particular, the Basel Committee has published:

• Technical guidance for the capital treatment of loans subject to COVID-19-related government guarantees and payment moratoriums; and
• Technical guidance on the impact of COVID-19 upon expected credit loss accounting.

In addition, the Basel Committee has announced the following delays to implementation frameworks:

• One-year deferral for the implementation of the final two phases of the joint Basel Committee and International Organization of Securities Commissions’ framework for non-centrally cleared derivatives margin requirements. The revised deadlines mean that the new margin requirements will only apply to covered entities with an aggregate average notional amount of non-centrally cleared derivatives greater than €50bn from September 1, 2021 and those with an AANA greater than €8bn from September 1, 2022. This further extends the deadlines for the implementation of these margin requirements from the previous extensions made in July 2019. The U.K. Financial Conduct Authority has announced that it will be considering how to implement the changes to the margin requirements; and
• One-year postponement of the implementation of the revised methodology for the assessment of globally-systemically important banks, from 2021 to 2022. The Basel Committee published its revised methodology and higher loss absorbency requirement for the assessment of G-SIBs in July 2019, following consultations on potential enhancements to the existing G-SIB framework. The revised methodology was due to apply from 2021, but will now apply from 2022. The Basel Committee has so far made no mention of deferring the implementation of the higher loss absorbency requirement, due to come into force on January 1, 2023.

View the Basel Committee's announcement on measures to combat the impact of COVID-19.

View the Basel Committee's Technical Guidance on capital treatment of loans impacted by government COVID-19 measures and
expected credit loss accounting.

View details of the Group of Central Bank Governors and Heads of Supervision's changes to Basel III implementation deadlines.

View the FCA's response to the Basel Committee's changes to the non-centrally cleared derivatives margin requirements implementation dates.

View details of the Basel Committee's previous extension to the non-centrally cleared derivatives margin requirements deadline.

View details of the Basel Committee's revised assessment framework and higher loss absorbency requirement for G-SIBs.

Details of other regulatory responses to COVID-19 are available on our COVID-19 Research Center.
 
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