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MNI POLICY: ECB Relaxes Bank Capital and Operational Limits

By Luke Heighton
     FRANKFURT (MNI) - The ECB's Banking Supervision arm said Thursday it would
allow banks to fully use capital and liquidity buffers to support their real
economy funding operations in the face of an expected economic crisis caused by
the coronavirus, and will consider the implementation of operational flexibility
supervisory measures on a "bank specific" basis.
     "The coronavirus is proving to be a significant shock to our economies.
Banks need to be in a position to continue financing households and corporates
experiencing temporary difficulties. The supervisory measures agreed today aim
to support banks in serving the economy and addressing operational challenges,
including the pressure on their staff," Andrea Enria, Chair of the ECB
Supervisory Board, said.
     Here are the key points from the decision:
     - Banks can operate temporarily below the level of capital defined by
Pillar 2 Guidance, the capital conservation buffer and the liquidity coverage
     - These measures will be enhanced by the appropriate relaxation of the
countercyclical capital buffer by the national macroprudential authorities.
     - Banks will be allowed to partially use capital instruments that do not
qualify as Common Equity Tier 1 capital, for example Additional Tier 1 or Tier 2
instruments, to meet the Pillar 2 Requirements.
     - The ECB is discussing with banks such individual measures as rescheduling
on-site inspections and extending deadlines for the implementation of
remediation actions stemming from recent on-site inspections and internal model
--MNI Frankfurt Bureau; +49-69-720-146; email:
--MNI London Bureau; +44 203 865 3829; email:
[TOPICS: M$X$$$]

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