Capital Regulation

The OJK has removed the capital conservation buffer requirement, lowered the LCR and NSFR requirements to 80%, and deferred Basel III implementation.

The CBIRC is scrapping requirements that only allowed insurers to invest in bank bonds of large issuers based on their asset size, capital adequacy and credit rating.

The BSP said the revised measures are intended to provide credit and help ease the financial burden of firms heavily affected by the Covid-19 pandemic.

Under the RBNZ's 'very severe' stress test scenario, banks would fall below minimum regulatory capital, requiring "significant recovery responses" to avoid resolution options.

Market expectations of bank capital levels and the knowledge that capital will eventually need to be rebuilt make it difficult for banks to dip into their buffers.

The FSC has also clarified its expectations on ECL estimates under IFRS 9 and reiterated its relaxation of the D-SIB surcharge requirement.

Applicant financial institutions will no longer have to set profit targets as a condition for receiving state aid, and the 15-year repayment deadline will be scrapped.

The 'Financial Institutions Strategic Transfer Act' allows the creation of asset management companies to buy up non-performing assets from financial institutions.

FSS governor Yoon Suk-heun said financial firms should brace for a "prolonged fallout of Covid-19" and focus on boosting internal reserves and loss absorbency capacity.

The PBOC plans to further extend SME loan repayment deferrals to 31 March 2021, further drive down real interest rates, and bolster support for banks.