COVID-19 regulatory response
MADISON, WI (March 31, 2020) — World Council VP of Advocacy Andrew Price has been tracking the regulatory impact of COVID-19 in our member nations across the world. This list will update and more countries will be added as new information becomes available.
Australia
Relief
- Credit Unions considered Essential Services.
- Small businesses are impacted and stimulus packages being directed to SMEs.
- Reserve bank (central bank) $90 billion funding facility in place (with limits).
- Other liquidity funding mechanisms in place.
- APRA – relaxation around capital.
- Regulator allowing favourable capital treatment for payment deferrals and for SME loan.
- Payment deferrals and help for consumers taking place at the credit union level.
Restrictions
- Now in lockdown with closed borders.
Related Issues
- Ongoing monitoring to ensure liquidity availability.
- Regulatory Holiday to delay certain large compliance deadlines such as open banking is desired.
- Many credit unions working remotely, extending working hours, enacting disaster recovery plans.
Romania
Relief
- Consumer relief bills pending, including one that will provide a moratorium on payments through September. It is unclear if interest can be accrued or there can be recapitalization of missed payments.
Restrictions
- They are seeing some runs on banks and credit unions, but they now have limits on withdrawals. Generally, each institution can set limits to manage cash reserves.
- Cap on withdrawals of funds from banks (including CU deposits) – currently at 10 000 – 15 000 EUR per week, per credit union, but could be reduced further.
- Possible loan repayment break of up to eight months is under discussion.
Canada
Relief
- Expanded access to services for credit unions
- Increased farm lending made available.
- Increased mortgage insurance availability.
- Assistance to encourage small business lending.
- Various relief efforts made at the provincial level that varies per region.
- British Colombia credit unions allowed to draw down on capital buffers.
- Increased borrowing capacity raised by $16 billion, raised commercial cap limits from 30 to 40%.
- Changed risk-weighted asset level on certain loads.
- Emergency Lending Assistance currently being contemplated by centrals.
- Credit unions are extending mortgages, providing loan relief, made individually at credit union level. Many credit unions have reduced hours and some have closed branches
- Relief bills are providing child benefits, increased unemployment benefits, shorter waiting times for unemployment benefits, delayed tax filing and tax payments through fall, deferred student loans.
Restrictions
Related Issues
- Regulatory holiday desired to accommodate regulatory changes already in the works or with upcoming effective dates.
Croatia
Relief
- Banks together with the government have offered borrowers a three-month repayment holiday. Repayment of this three-month waiver could either be paid after the break or in small instalments over the coming months.
- No foreclosure or eviction action can be taken during the crisis.
- All credits considered category A on 31 December 2019 will be treated as such by the end of the year regardless of performance during the crisis.
- They can ask government to cover minimum wage for employees, which is a help, but there is a huge pressure on income.
Restrictions
- Moratorium on evictions and foreclosures.
Other Issues
- Not only do they have coronavirus (COVID-19), but a recent earthquake has killed a lot of people, further weakened the economy and damaged infrastructure.
North Macedonia
Relief
- Generally OK and have access to liquidity through central bank.
- Got an extension on characterizing bad loans as delinquent (from 90 to 150 days) which helps on the accounting side.
- Government wants to slash interest rates by 50% which will put pressure on profits.
Poland
Relief
- Relief bills coming that will help small businesses. They believe this will include credit unions.
- Bill coming to cover salaries of employees.
- CU-specific items coming including changes to decrease liquidity requirements.
- Relief from certain tax/liability burdens.
- Polish government plans to release 200 billion zloty in order to help SMEs and entrepreneurs hit by the crisis.
- Credit unions are likely to be covered by the scheme.
- National Association of Co-operative Savings & Credit Unions (Poland), a WOCCU member, has requested from a number of emergency measures from the regulator, including credit support from the national bank, ability to serve non-members, postponement of the return of funds in case of early repayment and more.
- Banks have announced a three-month suspension of mortgage loan payments. Interest rates can still be charged for the period of payment postponement.
Other Issues
- Some early indications that run on banks and credit unions have not occurred and the panic has passed.
- Mortgage loan repayment break applies to all mortgage holders. No proof of worsened financial situation is required. The additional break is provided in addition to any forbearance clauses already foreseen in the mortgage agreement. Government guidance about whether these measures apply to credit unions is still pending.
- Financial services sector is calling for a review of liquidity obligations and looking at tools for improving equity ratios (e.g. allowing a state agency to cover shares in credit unions).
Ireland
Relief
- North and South are working on forbearance of payments and provisions trying to protect the credit ratings of consumers.
Other Issues
- They are also seeing people withdrawing large amounts of cash. They are trying to get favourable treatment along with the banks to ease certain restrictions to assist with the crisis.
Ukraine
Relief
- Received relief to allow General Assembly meetings to be postponed and for such meetings to occur remotely.
- Relief for postponement of the expiration of the powers of the Supervisory Board or Auditing Committee allowing them to
Restrictions
- Credit unions have been temporarily closed down by the government because they do not provide services online and they don’t want people physically coming into branches.
United States
Relief
- US Senate provides small business support and individual support.
- Extension of compliance for CECL by one year.
- Flexibility for virtual board meetings.
- Regulator now has the ability to insure non-interest bearing transaction accounts at unlimited level.
- Additional guidance on TDRs released.
- Ability to participate in paycheck protection program through Treasury and SBA.
- Lending to cover payroll on condition that they don’t layoff employees (forgiveness).
- Mechanism for government-owned or -backed mortgages for deferrals– 60-day deferral and four additional 30-day deferrals.
- COVID-19 Relief Bill.
- Physical/in-person exams curtailed.
- Deadlines for certain reporting delayed (HMDA, FCRA, etc.).
Restrictions
- Individual states are restricting all non-essential businesses from operating.
- Individual states are issuing stay-at-home or shelter-in-place mandates.
- Individual states are issuing mandatory curfews.
Other Issues
- Need short-form process for relief processes–quick restructuring of loans for coronavirus relief.
European Union (EU) Level Response:
The European Banking Authority (EBA) and European Securities and Markets Authority (ESMA) have issued guidance on the application of the prudential framework regarding Default, Forbearance and IFRS9 in light of COVID-19 measures, and the EBA issued a clarification on the application.
ESMA issued a similar statement, saying that measures taken in the context of the crisis regarding suspension or delays in payments should not be regarded as automatically having an impact on the assessment of whether loans have suffered a significant increase in credit risk (SICR).
The EBA specifically calls for “flexibility and pragmatism” in the application of the prudential framework. For example, it states that, as part of national measures taken during the crisis, late payment should not lead to automatic classification as “in default.” The EBA also called on credit institutions to exercise “a certain degree of judgment” in applying IFRS 9, particularly by distinguishing between borrowers who are temporarily vulnerable because of the crisis, but who will be able to cope in the long term, and those who are unlikely to become solvent again.
About World Council of Credit Unions
World Council of Credit Unions is the global trade association and development platform for credit unions. World Council promotes the sustainable development of credit unions and other financial cooperatives around the world to empower people through access to high quality and affordable financial services. World Council advocates on behalf of the global credit union system before international organizations and works with national governments to improve legislation and regulation. Its technical assistance programs introduce new tools and technologies to strengthen credit unions' financial performance and increase their outreach.
World Council has implemented 300+ technical assistance programs in 90 countries. Worldwide, 82,758 credit unions in 97 countries serve 404 million people. Learn more about World Council's impact around the world at www.woccu.org.
