United efforts indispensable to overcome crisis
We welcome both the decision to update the Supervisory Review and Evaluation Process (SREP) Guidelines and the overarching objectives to increase convergence of practices across the EU and to align with other relevant EBA Guidelines.
The financial industry faces an unprecedented challenge that may last for quite some time due to the coronavirus pandemic, states a letter for policymakers worldwide from savings and retail banking association WSBI. Signed by its President Isidro Fainé and Managing Director Chris De Noose, the letter says focus starts with saving as many lives as possible, eradicating the coronavirus pandemic and ensuring that the so-called “real economy” suffers as little as possible from vast Covid-19-caused economic damage.
Support measures done so far by governments can help SMEs, WSBI writes, expecially the the self-employed and individuals, as well as larger, heavily affected industries such as the services sector at large, in particular manufacturing, transport and tourism.
“Economic, financial, fiscal and social measures need to be designed and implemented straightaway, the letter states, adding “international cooperation is of utmost importance. The world needs to face the coronavirus crisis with decisive actions in a united and well-coordinated manner.”
Committed to people, communities, SMEs and beyond
Savings and retail banks fully commit to supporting their customers, the letter states, be it individual people, families, SMEs, institutions, young people, the elderly and society in general who live in urban as well as in rural areas. “We aim to figure out the best, sustainable solutions. Locally rooted savings and retail banks have a crucial stabilising function in times of crisis with their infrastructure, closer relationship with customers and continuous lending.” WSBI member banks help SMEs and other companies overcome liquidity bottlenecks and provide stability. “For this to succeed,” WSBI added, “everything possible should be done in regulatory and macroprudential terms to maintain the liquidity and credit supply.”
On firmer footing since crisis
Playing an essential part of the solution, savings and retail banks see major financial reforms during the past decade have made their banks safer, more stable and more resilient in the face of shocks. Facing the coronavirus on stronger footing, their inclusive and socially committed approach to banking remains vital and steadfast during challenging times like these, they note.
WSBI added: “Clients of savings and retail banks can continue to rely on their banks as partners that do their utmost to mitigate the effects of this critical situation. Now, more than ever, we will stand strong to provide confidence, comfort and trust when customers and communities need it most.”
Policy ideas to give banks enough flexibility
WSBI members welcome the measures already taken by authorities, and proposes ideas to give banks “enough flexibility to continue supporting their customers. Some steps already taken need additional guidance and extended scope to achieve their objectives.” They include:
- temporarily relax the rules when it comes to capital and liquidity buffers
- increase monitoring, develop contingency plans and provide additional support for the most hard-hit sectors – tourism, transportation and the hospitality industry – by easing the tax burden for certain much-affected firms in vulnerable regions.
- a plan to recover economic activity and production of goods and services and to stimulate consumption to prevent the economy from recession.
- public authorities should free up additional capital and provide loan guarantees
- flexibility on the asset quality assessment of loans by supervisors when public moratoria on payments have been implemented. This would also strengthen banks in temporarily supporting solvent clients facing liquidity difficulties.
IFRS 9 accounting standard implementation for the recognition of loan loss provisions should take into account the disruptive Covid-19 crisis. It is crucial that banks are granted enough manoeuvring room to modify the payment schedule of the affected borrowers without affecting their accounting provisions nor their solvency; that is, avoiding the increase in non-performing assets that would derive from the current regulations.
Global coordination, relief measures much needed
At national and regional level, much can be done through coordination among policymakers, keeping neighbors in mind. At a global level, need exists for G20 to prioritise global financial stability, a sustainable and swift recovery and a balanced development as common goals. The recent G7 leaders’ commitment to do ‘whatever is necessary’ to support the global economy, a very well received first step, but future decisions regarding interpretation, adjustments, and tailoring of regulations must be properly coordinated at global level via the Financial Stability Board, the Basel Committee, the International Organization of Securities Commissions and the International Association of Insurance Supervisors. The IMF has also underlined the need for global coordination in its recent paper on policy.
What happens next
WSBI suggests in its statement that regulatory authorities ask themselves if new regulatory requirements that are planned to be implemented in 2020-2022 are critical, or, if there is a possibility, that they can be delayed by 1-2 years, depending on how the crisis further develops. Even if only a part of the upcoming regulation could be delayed this would certainly help banks, and other players, to focus their resources on critical immediate action.
Once the emergency has been overcome and the situation is stable, it may be useful to carry out an impact assessment in order to see what measures should be taken to ensure that the global economy is still growing.
Download
WSBI statement on Covid-19: united efforts to overcome the crisis are indispensable
related
May 17, 2022
Data Act – An open data economy should be multilateral and cross-sectoral
ESBG's response to the European Commission consultation on the proposed Data Act calls for a horizontal regulatory approach to establish a consistent and harmonised rules for all sectors. ESBG is the…
May 12, 2022
Overtime for Ukrainian war refugees: DSGV employees donate over 100,000 euros through extra work
European Savings and Retail Banking Group members are standing in solidarity with people in need in Ukraine.
May 12, 2022
Stand with Ukraine: Erste family provides extensive humanitarian aid
European Savings and Retail Banking Group members are standing in solidarity with people in need in Ukraine.
May 12, 2022
The German Savings Banks Association ( DSVG ): More than 100,000 accounts already opened for Ukrainian war refugees
European Savings and Retail Banking Group members are standing in solidarity with people in need in Ukraine.
May 12, 2022
CaixaBank has been leveraging its network of branches in Spain to assist asylum seekers and refugees fleeing Ukraine
European Savings and Retail Banking Group members are standing in solidarity with people in need in Ukraine.
May 12, 2022
Ukraine: ESBG members reaffirm their social responsibility
European Savings and Retail Banking Group members are standing in solidarity with people in need in Ukraine.
April 28, 2022
ESBG response to ESMA’s consultation on guidelines of MiFID II suitability requirements
ESBG's response to the European Securities and Market Authority (ESMA) consultation on some MiFID II sustainability aspects. European banks calls for clear procedures and to avoid unnecessary…
April 28, 2022
Scale2Save brings Ugandan financial stakeholders to commit for financial inclusion
A WSBI knowledge sharing event in Kampala ended with joint call to action for financial inclusion.
April 4, 2022
Developing a proportionate, fair and efficient IRRBB framework in the EU
On 4 April 2022, ESBG responded to the EBA consultation specifying technical aspects of the revised framework capturing interest rate risks for banking book (IRRBB) positions.
March 30, 2022
Scale2Save champions inclusive financial services for Nigerians
WSBI's programme held its first event in-person event since the pandemic in Lagos to great success.