Activities of Jonás FERNÁNDEZ related to 2020/0066(COD)
Reports (1)
REPORT on the proposal for a regulation of the European Parliament and of the Council amending Regulations (EU) No 575/2013 and (EU) 2019/876 as regards adjustments in response to the COVID-19 pandemic
Amendments (6)
Amendment 21 #
Proposal for a regulation
Recital 7
Recital 7
(7) Guarantees provided in the context of the COVID-19 pandemic by national governments or other public entities, which are eligible as credit protection providers under the credit risk mitigation rules set out in Chapter Four of Part Three of Regulation (EU) No 575/2013 are comparable regarding their risk mitigating effects to guarantees provided by official export credit agencies as referred to in Article 47c of Regulation (EU) No 575/2013. It is therefore justified to align the minimum coverage requirements for non-performing exposures benefiting from guarantees granted by national governments or other public entities to those benefiting from guarantees granted by official export credit agencies. Therefore, guarantees and counter- guarantees that are extended in the context of the COVID-19 pandemic in accordance with State aid rules should be treated in the same way as guarantees provided by official export credit agencie on a permanent basis.
Amendment 22 #
Proposal for a regulation
Recital 7 a (new)
Recital 7 a (new)
(7a) The economic crisis deriving from the COVID-19 pandemic requires extensive public financing to limit the economic downturn. In view of substantial decrease in fiscal revenues and expected budget deficits, governments must rely on the issuance of government debt to fund exceptional measures. In the case of non-euro area Member States, it may become difficult and, in some cases, impossible to secure all necessary emergency funding only in domestic currency while at the same time relying primarily on local markets that are limited in size and liquidity, especially under the current extraordinary situation. Financing by issuing government bonds denominated in the currency of another Member State, and in particular in the euro, may be necessary to support measures to fight the consequences of the COVID-19 pandemic. Therefore, it is necessary to prolong and reintroduce the transitional arrangements for exposures to central governments and central banks denominated in the currency of another Member State both with respect to the risk weights assigned to these exposures and the application of the large exposure rules, while safeguarding the application credit risk mitigation rules.
Amendment 23 #
Proposal for a regulation
Recital 7 b (new)
Recital 7 b (new)
(7b) The high level of market volatility which has been seen since the outbreak of the COVID-19 pandemic has considerable impact on the quantitative market risk multiplier embedded on banks' internal models. Banks are required to backtest their internal models daily to assess if their internal models generate sufficient capital requirements to absorb trading losses. A failure in the backtesting requirement, or overshooting, over a number of days results in automatic penalties to be applied to the market risk internal models. The backtesting requirement is therefore highly procyclical in a period of extreme volatility as the one we currently face. To mitigate the negative effects of such requirement, further flexibility should be allowed in the rules to permit supervisors to temporarily disregard backstop overshooting rules.
Amendment 24 #
Proposal for a regulation
Recital 7 c (new)
Recital 7 c (new)
(7c) The extraordinary impact of the COVID-19 pandemic is also observed on the extreme levels of volatility in financial markets. Today we observe how volatility and uncertainty are leading to increasing yields of public debt that, in turn, give rise to unrealised losses on banks' exposures in public debt. In order to mitigate the considerable negative impact of market volatility on bank’s regulatory capital and therefore on the institutions' capacity to lend to clients, a temporary, COVID-19 related prudential filter on exposures to central governments should be re- established.
Amendment 30 #
Proposal for a regulation
Recital 11
Recital 11
(11) To mitigate the potential impact that a sudden increase in expected credit loss provisions may have on institutions’ capacity to lend to clients at times when it is most needed, the transitional arrangements should be extended by two years and institutions should be allowed to fully add-back to their Common Equity Tier 1 capital any increase in new expected credit loss provisions that they recognise in 2020 and 2021 for their financial assets, which are not credit-impaired. However, to avoid penalising those institutions with a positive dynamic component in the period of 2018-2019, they should be allowed to replace the reference date of 2020 with 2018 when the sum of expected credit losses is lower at this date. This would bring additional relief to the impact of the COVID-19 crisis on institutions’ possible rise in provisioning needs under IFRS 9 while maintaining the transitional arrangements for the expected credit loss amounts established before the pandemic of COVID-19.
Amendment 35 #
Proposal for a regulation
Recital 12 a (new)
Recital 12 a (new)
(12a) The COVID-19 pandemic has also led to significant constraints for banks to deal with NPLs, both new and stock. Banks are expected to continue decreasing the existing stock of NPLs during 2020. However, under current circumstances, it is extremely difficult to comply with the rate of overall reduction of NPLs observed in recent years, given that NPL markets are closed and judicial procedures are significantly delayed or suspended in several Member States. This will certainly have a negative impact on banks' recovery rates and recovery times. Against this background, a temporary freeze of banks' NPL calendar is envisaged.