Capital Regulation

The new measures will include another RRR cut, $141bn in re-lending and re-discounting quotas, and new bond issuances to exclusively support SME loans.

Banks can draw down on capital conservation buffers, defer capital requirements, and avoid classifying borrowers as non-performing.

The FSA also said NSFR implementation is being deferred by one year to April 2021, as the BOJ relaxes the eligibility requirements for firms to participate in its market operations.

Small- and mid-sized banks are likely to struggle more as they have less capital in reserve and fewer state borrowers they can call on.

Rabobank, ING, ABN Amro, UniCredit, Commerzbank, Banco Santander, KBC Bank, Allied Irish Bank and Bank of Ireland have suspended dividend and buyback plans until 1 October.

Aside from deferring Basel III adoption, the HKMA is considering the implications of Covid-19 on the application of expected credit loss provisioning.

Business continuity plans, social distancing measures, economic stimulus and liquidity constraints are hindering banks’ abilities to stay consistent with regulators' expectations, says Peter Guy.

Lower risk sensitivity on SME loans under the Basel III credit risk framework will raise capital adequacy ratios at banks, allowing them to provide additional funding to businesses.

BNM is allocating an additional 4 billion ringgit to its financing facilities for SMEs and lowering interest rates to help them sustain their operations and preserve jobs.

The move will allow ADIs to dedicate time and resources to maintaining their operations and supporting customers, APRA says.