Regulation (EU) 2020/873 amending Regulations (EU) No 575/2013 and (EU) 2019/876 as regards adjustments in response to the COVID-19 pandemic

Summary:

Regulation (EU) 2020/873 - adopted by the Council of the European Union and the European Parliament on 24 June 2020 - which introduced amendments to Regulation (EU) No 575/2013 (Capital Requirements Regulation) and Regulation (EU) 2019/876 (CRR II).

Further information:

Regulation (EU) No 575/2013 is seen as one of the main pillars of the European Union's prudential regulatory framework for credit institutions operating across the EU. The proposed amendments aim at implementing some changes to maximise the capacity of credit institutions to lend and to absorb losses related to the COVID-19 (coronavirus) pandemic, while still ensuring their continued resilience.

The changes include exceptional temporary measures to alleviate the immediate impact of Coronavirus-related developments, by adapting the timeline of the application of international accounting standards on banks' capital, by treating more favourably public guarantees granted during this crisis, by postponing the date of application of the leverage ratio buffer and by modifying the way of excluding certain exposures from the calculation of the leverage ratio. The Commission also proposes to advance the date of application of several agreed measures that incentivise banks to finance employees, SMEs and infrastructure projects.

This proposal was tabled by the European Commission on 28 April 2020 as part of a package on banking matters, which also included an Interpretative Communication on the application of the accounting and prudential frameworks. The Council of the European Union and the European Parliament signed off the draft law on 24 June, which was published in the Official Journal on 26 June.

• Primary Source

Commentary and Analysis

ABBL: News, 15/05/2020: COVID 19 : Adapting the EU’s Capital Requirements Regulation https://www.abbl.lu/2020/05/15/covid-19-adapting-the-eus-capital-requirements-regulation/

ABBL: News, 29/05/2020: COVID-19: the adaptation of the EU’s Capital Requirements Regulation - Part II https://www.abbl.lu/2020/05/29/covid-19-the-adaptation-of-the-eus-capital-requirements-regulation-part-ii/

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Official

EUR-Lex: COM(2020)310: Proposal for a Regulation amending Regulations (EU) No 575/2013 and (EU) 2019/876 as regards adjustments in response to the COVID-19 pandemic https://eur-lex.europa.eu/legal-content/EN/ALL/?uri=COM:2020:310:FIN

European Parliament: Legislative Observatory: Procedure file for Proposal on Capital Requirements Regulation: adjustments in response to the COVID-19 pandemic https://oeil.secure.europarl.europa.eu/oeil/popups/ficheprocedure.do?reference=2020/0066(COD)

European Parliament: Legislative Train Schedule: Banking Package to facilitate lending to households and businesses in the EU https://www.europarl.europa.eu/legislative-train/theme-coronavirus-and-eu-action/file-coronavirus-banking-package/05-2020

European Commission: DG Financial Stability, Financial Services and Capital Markets Union: Banking package to facilitate lending to households and businesses in the EU https://ec.europa.eu/info/publications/200428-banking-package-communication_en

European Commission: Press Release, 28/04/2020: Coronavirus Response: Commission adopts banking package to facilitate lending to households and businesses in the EU https://ec.europa.eu/commission/presscorner/detail/en/ip_20_740

European Commission: Questions and Answers, 28/04/2020: Coronavirus response: Banking Package to facilitate bank lending- Supporting households and businesses in the EU https://ec.europa.eu/commission/presscorner/detail/en/qanda_20_757

European Commission: Remarks by Executive Vice-President Dombrovskis at the press conference on the Commission banking package to facilitate lending to households and businesses in the EU (28 April 2020) https://ec.europa.eu/commission/presscorner/detail/en/speech_20_769

UK House of Commons: European Scrutiny Select Committee: Ninth Report of Session 2019-2021: COVID-19: Relaxation of EU capital requirements for banks https://publications.parliament.uk/pa/cm5801/cmselect/cmeuleg/229-vi/22908.htm

S&D Group: Newsroom, 08/06/2020: CRR Quick Fix: S&Ds lead European Parliament in adopting rules to ensure banks play constructive role in economic recovery https://www.socialistsanddemocrats.eu/newsroom/crr-quick-fix-sds-lead-european-parliament-adopting-rules-ensure-banks-play-constructive

European Parliament: Press Release, 09/06/2020: COVID-19: Revised rules to encourage banks to lend to companies and households https://www.europarl.europa.eu/news/en/press-room/20200608IPR80708/

Council of the European Union: Press Release, 24/06/2020: COVID-19: Council adopts exceptional rules to facilitate bank lending in the EU https://www.consilium.europa.eu/en/press/press-releases/2020/06/24/covid-19-council-adopts-exceptional-rules-to-facilitate-bank-lending-in-the-eu/

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