Coronavirus: European banks step up push for regulatory forbearance
Central banks have told lenders to eat into their buffers, but intense debate remains over recognition of non-performing loans in the push for debt moratoria.
Banks across Europe are being pushed or forced to grant loan-repayment holidays, resulting in growing calls in the sector for greater slack from regulators, particularly on the reporting of bad debts.
Investor worries about lower pay-outs – even emergency capital raisings – are weighing heavily on banks’ equity and subordinated debt values.
Global central banks have flagged that banks should eat into capital and liquidity buffers, which are generally much higher than they were before the 2008 financial crisis. The question, though, is whether it’s enough: especially as delayed payments by households and businesses should command higher provisions.