Repealed
These Guidelines follow the implementation of a broad range of measures, such as legislative moratoria on loan repayments and public guarantees in Member States, with the aim to support the operational and liquidity challenges faced by borrowers. The Guidelines have been developed to address data gaps associated with such measures to ensure an appropriate understanding of institutions’ risk profile and the asset quality on their balance sheets both for supervisors and the wider public.
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 Finally, the EBA Guidelines on Covid-19 reporting and disclosure have been repealed in response to the decreasing relevance of the related public support measures, and the overall EBA proportionate approach to reporting.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.
The European Banking Authority (EBA) published today some frequently asked questions related to the implementation of its Guidelines on reporting and disclosure of exposures subject to measures applied in response to the COVID-19 crisis. The technical clarifications provided by the EBA will assist supervisors and credit institutions in the implementation of the Guidelines. The implementation questions and technical clarifications have been included in a newly added section 4 to the EBA Report on the implementation of selected COVID-19 policies, first published on 7 July 2020.
Since the publication of the Guidelines on COVID-19 reporting and disclosure, several points including, technical questions, have been brought to the EBA’s attention by supervisors and credit institutions. In section 4 of the Report, the EBA provides clarification to these points.
As a significant number of issues have arisen and may continue to arise in the context of the EBA’s monitoring of the implementation of COVID-19 policies, the EBA expects to update the Report at a later stage.
The European Banking Authority (EBA) published today its Guidelines on reporting and disclosure of exposures subject to measures applied in response to the COVID-19 crisis. These Guidelines follow the implementation of a broad range of measures, such as legislative moratoria on loan repayments and public guarantees in Member States, with the aim to support the operational and liquidity challenges faced by borrowers. The Guidelines have been developed to address data gaps associated with such measures to ensure an appropriate understanding of institutions’ risk profile and the asset quality on their balance sheets both for supervisors and the wider public.
Since the outbreak of the COVID-19 crisis, national governments and EU bodies have taken measures to address and mitigate the adverse systemic economic impact of the pandemic on the EU banking sector. In particular, the EBA is engaged in an effort to provide clarity to institutions on the application of prudential and supervisory measures to support lending into the real economy.
In the context of the COVID-19 crisis, the measures introduced by authorities in the EU banking sector have created some data gaps in supervisory reporting and disclosure. Whilst the measures are designed to ensure support for EU citizens and business during the crisis, regulators and supervisory authorities still have a responsibility to ensure that information is available to monitor and understand any risks associated with banks’ activities.
These Guidelines cover information that is crucial for understanding the prudential soundness of individual institutions, without impacting their treatment of creditors under moratoria or public guarantees. The information requested here reflects the type of information that senior managements in institutions are asking for, and is key for understanding the overall financial stability in the EU.
To ensure efficiency, a coordinated EU approach in the collection of additional information is needed. That is why the EBA is introducing, on a temporary basis, additional reporting for the application of the payment moratoria, forbearance measures applied in response to COVID-19 to the existing loans and public guarantees to new lending in response to the COVID-19 pandemic. In the development of these reporting and disclosure templates, the EBA was particularly mindful of the need for proportionality that can take account of the size and complexity of the institutions, as well as of the specificities of the measures introduced in Member States, and institutions’ operational efficiency in current circumstances.
These additional reporting and disclosure requirements are expected to be time-limited as they are introduced strictly in the context of the COVID-19 pandemic.
The first reporting reference date and the disclosure reference date will be 30 June 2020. The reporting guidelines will be part of the version 2.10 reporting framework release that will be published in June 2020.
These Guidelines have been drafted in accordance with Article 16 of Regulation (EU) No 1093/2010 (EBA Founding Regulation), which mandates the Authority to issue guidelines addressed to all competent authorities or all financial institutions and issue recommendations to one or more competent authorities or to one or more financial institutions, with a view to establishing consistent, efficient and effective supervisory practices within the ESFS, and to ensuring the common, uniform and consistent application of Union law.