Responding to the EBA’s statement on the application of the prudential framework regarding Default, Forbearance and IFRS9 in light of COVID19 measures, Michael Lever, Head of Prudential Regulation at AFME, said: 
 

“The EBA’s statement brings helpful clarifications on how banks should approach provisioning requirements in cases where customers have received forbearance in respect of their obligations under public or private moratoria. The EBA’s guidance on appropriate measures concerning the protection of consumers and the orderly function of payments services across the EU is also welcome as is the delayed timetable for open consultations and public hearings. 
 

“However, it would also be helpful to receive advice on how firms are expected to deal with the procyclicality effect on the prudent valuations of assets and clarification of the EBA’s timetable regarding its internal model repair programme.
 

“This proactive approach by the EBA in providing useful clarifications on a number of important practical matters will help banks to confidently and speedily provide the relief their customers need. It will also ensure that valuable operational resources are not unnecessarily diverted away from meeting this key objective.”

-ENDS-