31 March 2020
Following its call for flexibility in the prudential framework and supervisory approaches to support lending into the real economy, the European Banking Authority (EBA) clarified today its expectations in relation to dividend and remuneration policies, provided additional guidance on how to use flexibility in supervisory reporting and recalled the necessary measures to prevent money laundering and terrorist financing (ML/TF).
The EBA supports all the measures taken so far to ensure banks maintain a sound capital base and provide the needed support to the economy. In this respect, the EBA reiterates and expands its call to institutions to refrain from the distribution of dividends or share buybacks for the purpose of remunerating shareholders and assess their remuneration policies in line with the risks stemming from the economic situation.
In addition, the EBA provides details on its call for competent authorities to offer leeway on reporting dates, urging one-month flexibility for reports with remittance dates between March and the end of May 2020. The EBA also called for flexibility in assessing deadlines of institutions’ Pillar 3 disclosures. This flexibility would not put at risk the access to crucial information on banks’ capital, risks and liquidity, which is needed to monitor closely their financial and prudential situation. Furthermore, the EBA decided, in coordination with the Basel Committee on Banking Supervision (BCBS), to cancel the Quantitative Impact Study based on June 2020 data.
Finally, as measures to prevent money laundering and terrorist financing (ML/TF) remain crucial in this challenging time, the EBA calls on competent authorities to support financial institutions’ ongoing efforts by sharing information on emerging ML/TF risks, setting clear regulatory expectations and using supervisory tools flexibly.
All the EBA statements in relation to its response to the COVID-19 are available here.