Covid–19 Resource Centre
The current Covid-19 pandemic is impacting governments, citizens, and businesses across Europe and the globe. The pandemic has also confronted treasurers with a number of profound challenges. The EACT would like to make available to you, our member associations and member companies, an overview of some of the most relevant public policy initiatives that supervisors, regulators, and politicians are discussing or have taken to provide support for European businesses and citizens.
There are also resources available from across some of our member associations that we would like to draw your attention to:
- Verband Deutscher Treasurer (Germany) Covid-19 information portal.
- Association of Corporate Treasurers - ACT (UK) Covid-19 centre.
- Association Française des Trésoriers d'Entreprise - AFTE (France) Covid-19 section.
- Associazione Italiana Tesorieri d' Impresa - AITI (Italy) Covid-19 centre.
In these difficult times, with many of us working under strict confinement rules, we would also like to urge you to reach out either directly to us at EACT or to your national treasury associations (here) if you would find it useful to get in touch with peers in other companies or countries to discuss the current challenges you are facing as a treasurer.
European Commission (last updated 27 May)
- The European Commission has proposed a € 750 billion recovery faciltiy to fund Member State economic recoveries through a mix of grants and loans. The facility could also include a Solvency Support Instrument for companies that are facing liquidity shortages and would without the pandemic have been considered viable.
- The European Commission presented a package of guidelines and recommendations to help Member States gradually lift travel restrictions and allow tourism businesses to reopen safely after months of lockdown
- The European Commission has adopted new rules to provide governments with legal certainty when wishing to recapitalise or use subordinated debt to support companies in light of Covid-19 under the EU’s State Temporary Framework.
- The European Commission provides an overview of some of the most relevant economic support measures taken by Member States.
- The European Commission published a legislative amendment to the EU’s bank capital framework – the Capital Requirements Regulation (CRR) – to ensure harmonised relief measures for the banking sector across the EU and make full use of the flexibility embedded in the CRR framework. The EC also published an interpretative communication on the application of prudential and accounting rules to support bank lending during the Covid-19 crisis
- Presidents of the European Council and the European Commission proposed a joint ‘roadmap for recovery’ through reinforcement of the Single Market and a vast investment plan, as well as a doubling down on the green and digital transformation, and completion of the Capital Markets and Banking Unions.
- The European Commission has published a proposed roadmap towards a common lifting of confinement measures that have been put in place across the EU.
- Executive Vice-President Valdis Dombrovskis gave an interview highlighted that it was unnclear whether many EU Member States would at all choose to use the credit facilties offered by the European Stability Mechanism (ESM), while highlighting the important role that the EU budget is likely to play in funding post-crisis recovery measures. Dombrovskis also indicated that EU leaders would need to decide at a meeting on 23 April on the creation of an additional recovery fund that can tap capital markets independently.
- Resource centre of the European Commission with all measures proposed and adopted so far to support EU companies and Member States.
- Temporary state aid guidelines until the end of 2020 including direct grants, selective tax advantages, advance payments of up to €800 000 per firm, state guarantees, and subsidised interest rates on loans to cover companies’ liquidity needs.
Council of the EU (last updated 18 May)
- French President Emmanuel Macron and German Chancellor Angela Merkel have jointly announced their wish to have a €500 billion recovery fund in place. The proposal would permit the Commission to borrow the necessary funds on financial markets, provide immediate grants and financing to sectors and regions most hardly hit by the Covid-19 health and economic crises, and to reimburse the borrowed sum over the longer-term. The Franco-German joint statement also calls for an EU health strategy, the acceleration of the Green and Digital transition agendas, and commits to have a more autonomous Single Market.
- Member States have approved the SURE unemployment support scheme under which Member States can request up to EUR 100bn in support loans to finance temporary unemployment schemes during the crisis. Finalisation of the rules is foreseen by 19 May and they will remain operational until 31 December 2022.
- EU finance ministers agreed a joint statement on means by which the banking and insurance sectors should sustain support to the economy, urging both banks and insurers to forego dividend payments on a temporary basis to free up lending capacity to corporates and private consumers.
- The Eurogroup in its extended format, which includes all EU finance ministers, has agreed a toolbox of support measures for the EU economy. This includes:
- Credit facilities from the European Stabililty Mechanism (ESM) with a capacity of €410bn, allowing Member States to borrow at beneficial rates up to 2% of national GDP for Covid-19 relief measures;
- The proposed SURE unemployment support scheme with a capacity €100bn that will provide loans to Member States to support national unemployment schemes;
- A guarantee fund from the European Investment Bank with a capacity of €200bn to support lending operations to the economy.
European Central Bank (last updated 26 May)
- The ECB has published its first financial stability review for 2020, highlighting the additional vulnerabilities that the pandemic has caused in all segments of the financial system. For corporates the ECB highlighted in particular tightening funding conditions, risks of fund outflows as a result of corporate downgrades, and a worsening in credit conditions as potential consequences.
- The ECB published an interview with Philip Lane a member of its Executive Board on fiscal response to the coronavirus.
- The Governing Council of the ECB decided to launch a new series of longer-term refinancing operations (so-called ‘PELTROs’ - pandemic emergency longer-term refinancing operations) and ease the conditions under which it conducts its existing targeted longer-term refinancing operations (‘TLTROs’).
- The ECB has annoucned that eligibility crtieria for collateral posted by banks to access its liquidity faciliites would be relaxed to accomodate a situation in which assets may be subjected to rating downgrades.
- The ECB has publisehd a FAQ document on its commercial sector purchase programme (CSPP).
- The ECB announced a temporary lowering of capital requirements for market risk to maintain market making activities and market liquidity.
- The ECB has issued a positive opinion on the temporary reduction of counter-cyclical capital buffers (Tier 1 capital) that has been granted by a range of national competent authorities to banks.
- ECB has published a consolidated overview of all macroprudential support measures that have been adopted across the euro area by central banks and bank supervisors.
- Blog post on the ECB's commercial paper purchases by members of the executive board.
- Expanded asset purchase programme (CSPP) and Pandemic Emergency Purchase Programme (PEPP). As part of this programme the ECB has also committed to purchase commercial papers with an outstanding maturity of more than 28 days (in addition to bonds) of non-financial companies that have an investment grade rating.
- The ECB announced details on how it will expand the eligible collateral banks can post with the Eurosystem to participate in liquidity providing operations.
- The ECB issued a recommendation asking banks to refrain from distributing dividends (for 2019 & 2020) and buying back shares until at least 1 October 2020.
European Securities and Markets Authority - ESMA (last updated 20 May)
- ESMA clarified how it expects issuers to reflect the impact of the pandemic in their half-yearly financial report and management reports.
- ESMA published a thematic report on Collateralised Loan Obligation (CLOs) credit ratings in the EU. It highlights the new risks posed by the COVID-19 crisis on the ratings of CLO instruments, with ESMA indicating it would closely monitor CRAs’ assessment of CLOs.
- ESMA lowered the transparency threshold for net short positions in shares from 0.2% of the issued share capital of a listed company to 0.1% for an initial period of three months.
- ESMA has issued a public statement on forbearance regarding the deadlines for publishing financial reports applicable to listed issuers under the Transparency Directive.
- Public statement on the implementation of the Securities Financing Transactions Regulation (SFTR), providing further clarification on its decision to delay SFTR reporting.
- Public statement on the accounting implications of Covid-19 on the calculation of expected credit losses in accordance with IFRS9.
European Systemic Risk Board - ESRB (last updated 14 May)
- The ESRB carried out an assessment of liquidity and overall conditions in corporate bond and commercial paper markets since the outbreak of the pandemic and identified significant pressures over March and April, with some easing as a result of capital relief for banks and the monetary policy response of the ECB. Pressure could re-emerge in the short-term as a result of rating downgrades across the corporate segment.
European Banking Authority - EBA (last updated 9 April)
- The EBA released three statements clarifying the measures taken and its expectations in the EU banking sector, calling for the national authorities to also support the financial institution’s efforts in the crisis in the following areas: Supervisory reporting, Dividend distribution, share buybacks and variable remuneration, Actions to mitigate financial crime.
European Parliament (last updated 9 April)
- European Parliament President Sassoli issued a statement ahead of a Eurogroup meeting of finance ministers, urging governments to stand together to find shared ways of financing the post-crisis recovery.
- The European Parliament has compiled information on the measures proposed and taken at the EU or Euro Area level to mitigate the economic and social effects of Covid-19.
Financial Stability Board - FSB (last updated 15 April)
- The FSB has delivered an inital financial stability assessment to G20 finance ministers, highlighting distressed and deterorating credit market and liquidity conditions, but that post-2009 crisis reforms have resulted in functional derivatives markets and maintained bank lending to date. The assessment also highlights that a number of public policy measures have helped to ease liquidity and funding constraints across many member jurisdictions, but that the long-term impact of the worsening economic outlook has yet to materialse.
- The FSB has reprioritised its work programme for 2020, maintaining non-bank financial intermediation and payment efficiency as top priorities.
Basel Committee for Banking Supervision - BCBS (last updated 9 April)
- BCBS has proposed to delay the implementation deadline of the final set of Basel III standards (‘Basel IV’) by one year, to 1 January 2023.
- BCBS and IOSCO have announced the deferral of final implementation phases of the margin requirements for non-centrally cleared derivatives.
- Technical guidance on extraordinary measures introduced by jurisdictions in the Covid-19 crisis related to the treatment of loans and payment moratoria.
OECD (last updated 14 May)
- OECD global policy tracker of measures taken across all economic sectors to provide relief and support.
- The OECD Tax Administration published advice on business continuity considerations for tax administrations in order to support their cooperation efforts and better tackle the consequences of the COVID-19 outbreak.
- A global reference document containing the actions that national tax administrations are taking to support taxpayers.
Financial Action Task Force - FATF (last updated 14 May)
- The FATF published a report on COVID-19-related Money Laundering and Terrorist Financing Risks and Policy Responses
- The FATF issued a statement on financial crime in times of Covid-19 earlier this week asking obliged entities and regulators to remain vigilant.