A&O Shearman | FinReg | EU Banking ‘Quick Fix’ Regulation Published
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  • EU Banking ‘Quick Fix’ Regulation Published

    A new EU Regulation amending the Capital Requirements Regulation (and also amending the Regulation amending the CRR, known as CRR2), has been published in the Official Journal of the European Union. It is known as the CRR Quick Fix package and applies from June 27, 2020. The Regulation forms part of the EU’s response to the coronavirus pandemic.

    Among other things, the CRR Quick Fix package:
    • extends, by two years, the transitional measures for the implementation of IFRS 9; EU banks are required to implement these revised IFRS 9 transitional arrangements available to them to reduce the impact of IFRS 9 ECL provisioning on their regulatory capital;
    • amends the CRR2 discretion to disallow the exclusion of central bank debt from a leverage ratio, which would be effective from June 28, 2021, to be a one-off assessment at the point of draw down;
    • delays, in line with the Basel Committee on Banking Supervision measures, from January 1, 2022, to January 1, 2023, the leverage ratio buffer requirement for G-SIBs (introduced by CRR2);
    • ensures that non-performing loans guaranteed or counter-guaranteed by the public sector receive the beneficial risk-weighting extended to export-credit; to qualify, the guarantees must follow state aid rules; this changes the minimum amount of capital that banks must hold for NPLs;
    • brings forward the implementation date of the software asset deduction exemption, which is an exemption from the requirement to deduct certain software assets from CET1 capital, making it available from the date the related Technical Standards enter into force;
    • changes the application date from June 2021 to June 2020 of the measure lowering the capital cost for retail loans, which CRR2 introduced for loans granted by banks to pensioners or employees with a permanent contract against the unconditional transfer of part of the borrower’s pension or salary, changes to the SME supporting factor and the new infrastructure supporting factor.

    View the CRR Quick Fix Regulation.

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