COVID-19: Credit Action Plan for Banks
By Elmarie Van Breda
A featured article of our July 2020 edition of PRMIA's Intelligent Risk quarterly newsletter
European banks have been enabled to assist their customers during the COVID-19 pandemic recession1. The ECB provided monetary stimulus, and liquidity is being made available to banks through government debt funding support programs. However, the changed definitions of default, materiality, and forbearance by the EBA establish more restrictive IFRS9 impairments. Thus, it is inevitable that there will be increases in expected losses (EL) affecting earnings and unexpected losses (UL) affecting capital allocation.
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