The European Parliament approved an S&D report temporarily amending the Capital Requirements Regulation (CRR) to respond to the economic impact of the COVID-19 pandemic. The ‘CRR quick fix’ gives temporary capital relief to banks so they can lend to the real economy at a time of great need for companies. The approved text is the final agreement and the new regulation is expected to be in place by the end of June 2020.
Jonás Fernández S&D spokesperson on economic and monetary affairs and author of the report, said:
“Hard hit by the COVID-19 induced lockdown, SMEs and households are thirsting for capital. With the new rules adopted today, banks will have to step up to the plate and pump more money into the real economy. Thanks to the tough rules the European Parliament put in place after the last financial crisis, banks are now more resilient and well-capitalised, so they can and must play a constructive role in the economic recovery. By adjusting pro-cyclical rules, banks will be pushed to use build-up buffers to continue lending. Newly introduced prudential filters will reduce market-pressures on public debts, at a time when countries are forced to raise funds to support their industries and citizens through tough times. Making bank-lending to SMEs and infrastructure projects more attractive will not only help us get out of the crisis but also build a sustainable future as set out in the New Green Deal.
“I am proud that in the negotiations with member states, we could reach a balanced text that answers to the needs of our SMEs and citizens. Against all odds, we could even gain terrain in the fight for banning dividends and bonuses in times of economic hardship. We have introduced a clear mandate for the competent supervisors to make full use of their powers, including bans on dividends, distributions and share buy backs. Also, the Commission will have to report to Parliament on the effectiveness of the current system and, where needed, grant stronger binding powers to authorities. We owe it to citizens to ensure that the capital relief granted to banks will not end up in the pockets of investors but in the hands of SMEs, public authorities and households.”