16 December 2022
The European Banking Authority (EBA) today published its closure report of Covid-19 measures, which provides an overview of the wide range of policy measures taken on the back of the pandemic, their state of play and the path out of policy support. Although the EU banking system proved overall resilient, the ample support provided does not give room to complacency, and the framework is to be further strengthened with a loyal and prompt implementation of Basel III. The publication is accompanied by an update to the list of public guarantee schemes (PGS) and general payment moratoria schemes issued in response to the pandemic. Finally, the EBA Guidelines on Covid-19 reporting and disclosure have been repealed in response to the decreasing relevance of the related public support measures, and the overall EBA proportionate approach to reporting.
The unprecedented Covid-19 pandemic triggered containment measures that put large parts of the economy to a halt and created significant challenges for society. Against this backdrop, ample immediate support was provided, including to the EU banking sector, where policy actions were swiftly taken to mitigate its impact and ensure the flow of lending to the real economy, amid the extraordinary circumstances prompted by the pandemic and the associated short-term liquidity challenges.
Prompt actions taken at EU level, coupled with efficient ancoordination with member states and the flexibility left at the national level, proved successful in addressing the crisis. This was enhanced by the agility of the EU regulatory architecture with the swift development of Guidelines, and the flexibility embedded in the prudential framework.
The progressive weaning of policy support is leading the path to normalisation and the return to pre-pandemic standards, while vigilance continues to be exercised. Overall, the EU banking system has proved resilient to the Covid-19 crisis, preserving adequate capital ratios, displaying, on average, improved asset quality and continuing to hold substantial liquidity. However, the wide-ranging spectrum of support measures that helped weather the crisis does not give room to complacency on the resilience of the framework, which is to be further strengthened with a loyal and swift implementation in the EU of the Basel III reforms.
Together with the publication of the closure report of Covid-19 measures, an update is provided to the list of Public Guarantees Schemes and General Payment Moratoria Schemes issued in response to the pandemic.
Volumes of loans subject to various forms of payment moratoria and public guarantees under the scope of the Covid-19 reporting and disclosure guidelines continued to decrease during 2022, in a Covid-19-related situation of normalisation. In this context, and in line with the proportionate approach to supervisory reporting, the EBA has decided to repeal the Guidelines on Covid-19 reporting and disclosure from 1 January 2023.
The temporary Covid-19 reporting and disclosure framework was introduced in June 2020 on the basis of the Guidelines on reporting and disclosure of exposures subject to measures applied in response to the Covid-19 crisis (EBA/GL/2020/07) and was originally meant to be in place for 18 months.
On 17 January 2022, the EBA confirmed the continued application of Covid-19 reporting and disclosure requirements for another year, to ensure monitoring of exposures and the credit quality of loans with public support measures in those Member States, where those were still relevant. In that public communication, the EBA also committed to continuing its monitoring of the developments and to re-assessing the application of the Guidelines on an annual basis.
The decreasing relevance of the public support measures, which was the focus of the guidelines, as well as the overall EBA proportionate approach to reporting, has led the EBA to the decision to repeal the Guidelines from 1 January 2023.