European Central Bank Announces Temporary Capital and Operational Relief for Banks

The European Central Bank has announced a series of measures designed to support banks to continue their vital role of funding the real economy in the wake of COVID-19. Banks will be permitted temporarily to operate below the level of capital required by Pillar 2 Guidance, the capital conservation buffer and the liquidity ratio. They will also be permitted partially to use capital instruments that do not qualify as Common Equity Tier 1 capital to meet Pillar 2 Requirements. The ECB hopes that, together with EU national regulators' relaxation of the countercyclical capital buffer, these measures will provide significant capital relief to banks.
 
Banks are expected to use the positive effects from these measures to support the economy and not to increase dividends or variable remuneration. Other ECB measures are being discussed, including rescheduling of onsite inspections and extensions for internal model investigation deadlines.
 
View the ECB's announcement on capital and operational relief for banks.
 
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