Yes. Under Article 429a(1)(n) of the Capital Requirements Regulation (CRR), as last amended by Regulation (EU) 2020/873 (CRR ”quick fix”), under certain conditions, certain exposures to central banks can be excluded from the calculation of the leverage ratio. BaFin is hereby allowing the institutions under its direct supervision to make use of this temporary relief measure. The following exposures to the central banks of the Eurosystem may, on a temporary basis, be excluded from the total exposure measure in the calculation of the leverage ratio:

a) Coins and banknotes in EUR;
b) Assets representing claims on central banks of the Eurosystem in connection with the implementation of monetary policies, i.e. exposures in connection with deposits held in the deposit facility in addition to deposits held in the reserve accounts of the central bank, including deposits held in order to meet minimum reserve requirements.

Exposures to the central bank that are not related to the implementation of monetary policies may not be excluded.

In making use of this relief measure, institutions must observe the additional stipulations under Article 429a of the CRR. In particular, institutions must satisfy an adjusted leverage ratio requirement. This exception serves to facilitate the implementation of monetary policies. Therefore, BaFin hereby publicly declares, after consultation with the European Central Bank, that exceptional circumstances exist that warrant this exclusion. Furthermore, BaFin declares that the exceptional circumstances have existed since 31 December 2019.

This measure applies from 28 June 2021 until 31 March 2022. A separate application is not necessary. In the interests of maintaining a level playing field within the Single Supervisory Mechanism (SSM), this relief measure corresponds to the equivalent measure introduced by the ECB for significant institutions (SIs). The definitions of the terms “Eurosystem”, “deposit facility”, “reserve account” and “minimum reserve requirements” are based on the corresponding ECB decision ECB/2020/44.

The cycle for setting and ordering the SREP capital add-on will be suspended in 2020. This means capital add-ons scheduled to be reset in 2020 will be deferred; as a result, any capital add-ons (P2R) that have already been set will remain the same in 2020. In principle, any orders relating to capital add-ons (P2R) which have not yet been set for 2019 will still be issued.

The cycle has been suspended because of the changes in circumstances as compared to the situation as at the date of the 2019 annual financial statements.

As things currently stand, the SREP capital add-ons are to be reset for all institutions in 2021 and 2022 in order to take the situation surrounding the COVID-19 pandemic into consideration in the SREP capital determination. Institutions will be divided across the years 2021 and 2022 at a later date.

For mergers during 2020, an add-on that is weighted with the total risk exposure amount (TREA) should be determined, in line with the previous procedure. In the case of capital add-ons for new businesses that are due to expire, these will, as before, receive an initial SREP decision.

BaFin will also continue to send institutions outstanding letters regarding Pillar 2 Capital Guidance (P2G) (referred to in Germany as the Eigenmittelkennziffer (equity ratio) - EMZK) based on LSI stress tests conducted in 2019.

The Deutsche Bundesbank and BaFin will make use of additional documents from the institutions, such as risk reports, in order to assess their current risk situations.

BaFin will continue directly taking all the measures that will help to stabilise the financial market in the midst of the present circumstances. The measures it chooses will duly take into consideration the special situation currently being experienced by the financial market. Any additional economic burdens caused by supervisory measures would not be expedient.

If institutions recognise in their balance sheets funds from the KfW Instant Loan 2020 programme which they have passed on to ultimate borrowers as trust loans within the meaning of section 6 (2) of the German Regulation on the Accounting of Banks and Financial Services Institution (Verordnung über die Rechnungslegung der Kreditinstitute und Finanzdienstleistungsinstitute – RechKredV), these funds may be excluded from the leverage ratio under Article 429(13) of the CRR (in the version amended by Delegated Regulation (EU) 2015/62) and Article 429a(1)(i) of the CRR II.

Under Article 429(13) of the CRR and Article 429a(1)(i) of the CRR II, the following assets may be excluded from the leverage ratio: fiduciary assets which a credit institution administers in its own name but on behalf of third parties and which meet the criteria for non-recognition under IFRS 9 and the criteria for non-consolidation under IFRS 10.

If items are reported in the balance sheet as permitted under section 6 (2) of the RechKredV, BaFin will assume that the additional requirements under Article 429(13) of the CRR and 249a(1)(i) of the CRR II regarding the treatment of these items under IFRS 9 and IFRS 10 have been met.

LSIs and financial services institutions subject to supervision by BaFin that would have been required to submit reports in the period from 1 March 2020 to 31 May 2020, including institutions subject to a reporting requirement under section 1a of the KWG, will be permitted to submit these reports with a delay of up to one month from the statutory reporting deadline for the reporting templates of the ITS on Reporting and the ITS on Benchmarking and of up to two months from the statutory reporting deadline for reports in accordance with the Guideline on Funding Plans, provided the institutions in question are experiencing difficulties in submitting the report within the required period as a result of the ongoing COVID-19 crisis. The reporting templates under Article 15 (LCR) and Article 16b (ALMM) of the ITS on Reporting must be submitted by the reporting deadline.

Without regard for this rule, as a matter of principle, only those institutions that are in a difficult situation as a result of the COVID-19 crisis should make use of the option to submit a late report.

Under the Remuneration Regulation for Institutions (Institutsvergütungsverordnung – InstitutsVergV), (deferred) variable remuneration may not be determined and vested if the situation of the institution does not allow this (section 7 of the InstitutsVergV). Under section 7 (1) sentence 3 no. 1 of the InstitutsVergV, the institution’s and also the group’s internal capital adequacy, multi-year capital planning and profit situation, amongst other things, must be given consideration. It must also be ensured that the institution and the group are capable of permanently maintaining or restoring adequate capital resources (see section 7 (1) sentence 3 no. 2a of the InstitutsVergV).

Since institutions must treat their available capital resources with great care, they must give careful consideration to the matter before distributing bonuses: where institutions are not in compliance with Pillar 2 Capital Guidance, they may only consider paying bonuses if their failure to comply with Pillar 2 Capital Guidance does not affect their fulfilment of the requirements under section 7 of the InstitutsVergV. This must be reviewed and documented on a case-by-case basis with regard to the internal capital adequacy, capital planning and profit situation of the respective institution.

In this context, please also refer to the statement of the EBA dated 31 March 2020. The EBA recommends that competent authorities ask banks to review their remuneration policies and practices with regard to sound and effective risk management. Due to the current crisis situation, remuneration, in particular its variable portion, should be set at a conservative level. To achieve an appropriate alignment with risks stemming from the COVID-19 pandemic, a larger part of the variable remuneration could be deferred for a longer period and a larger proportion could be paid out in equity instruments.

Under BTO 1.2.1, item 1 of the MaRisk, the process of granting loans encompasses the necessary operational steps up to the loan payout. All factors which are material for assessing the risk must be analysed and assessed, taking particular account of the debt-servicing capacity of the borrower, with the intensity of the assessment depending on the riskiness of the exposures; assessments based on a simplified procedure are also permissible.

Simplified procedures are regularly used for non-risk-relevant credit transactions; in such procedures, under BTO 1.1, item 4 of the MaRisk, institutions may determine that only one vote is necessary for credit decisions. As specified in the explanations to BTO 1.1, item 4 of the MaRisk, each institution is individually responsible for differentiating between risk-relevant and non-risk-relevant credit transactions. Standardised retail business can normally count as non-risk-relevant credit business.

The KfW Instant Loan 2020 programme is targeted at retail business in the SME sector. Institutions granting loans in this context cannot be exposed to any credit risk since they are exempt from all liability, subject to the condition that they collect and review the documents required for the application and perform a borrower verification process. The KfW Instant Loan 2020 programme is based on the assumption that, after the crisis, eligible borrowers will be able to continue their activities in a way that is comparable in terms of type and scope to their business activities as at 31 December 2019. In light of this assumption, institutions will be considered to be acting in line with the MaRisk if, in granting such instant loans and in approving advances on support loans, they review the solvency of borrowers based on the simplified procedure, which allows for the granting of loans on the sole basis of the documents and additional information requirements contained in the information sheet on the KfW Instant Loan 2020.

The requirements with regard to the recovery plans of less significant institutions (LSIs) depend on whether the LSI in question is potentially systemically important (PSI), a high priority less significant institution (HP-LSI), or a less significant institution with simplified requirements for recovery planning. In order to counter the financial and operational strain resulting from the COVID-19 pandemic, BaFin is applying simplified requirements to all institutions provided they have a recovery plan that has already been reviewed and provided the plan does not contain any substantial deficiencies.

PSI/HP-LSI: PSI/HP-LSIs must normally comply with the recovery plan requirements (almost) in full; in deviation from this, the next scheduled update to the recovery plan may be limited to the key components of the recovery plan. Alongside a presentation of the available courses of action and of the overall recovery capacity, the key components of the recovery plan include, in particular, indicators, details on governance in the event of a crisis and an escalation process for the event of a crisis. With regard to the scenarios, it is sufficient if institutions simply update an existing market-wide scenario. BaFin encourages institutions to expand this market-wide scenario to include aspects and findings from the current COVID-19 pandemic, provided this is possible in terms of the time available and the contents of the scenario. Furthermore, deficiencies identified by BaFin in an institution’s previous recovery plan must only be remedied to the extent that they relate to the key components of the recovery plan as outlined above. BaFin will accept delays in the submission of updated recovery plans of up to three months for institutions that would normally have submitted their updated recovery plan before 1 July 2020.

LSIs with simplified requirements: At the end of 2019, BaFin published a recovery plan template and corresponding guidelines (only available in German) for LSIs that are subject to the simplified requirements for recovery planning. At the same time, BaFin started the process, in several waves, of requesting the institutions concerned to submit recovery plans for the first time. In light of the current situation, BaFin will delay until 31 October 2020 all written requests for recovery plans to institutions that have not yet been requested to submit a recovery plan according to the simplified requirements. The simplified requirements for resolution plans contained in the recovery plan template specify the absolute minimum requirements for recovery plans in terms of their contents. All LSIs may contact BaFin directly to discuss individually any questions relating to recovery planning (contact: sanierungsplanung@bafin.de).

In the coming days, BaFin plans to inform all institutions about the next steps by e-mail or letter. The European Central Bank will do the same for the institutions that fall under the scope of supervision of the Single Supervisory Mechanism.

Due to the unusual circumstances, auditors are currently being permitted to forego conducting on-site inspections. However, BaFin clearly points out that this is an exception that will only apply during the peak of coronavirus infections and for the period in which the measures aimed at tackling the coronavirus pandemic remain applicable. In particular, the requirement to have the statutory audits conducted will remain in effect. As a rule, entities must also ensure that the documents required for the audit are made available to the auditors electronically. If a comprehensive remote audit is not possible for lack of sufficient electronic access to all the documents required for the audit, the audit must be conducted at a later date. BaFin will not be following up on any missed deadlines in such cases. Institutions will not be required to submit a formal notice of interruption.

The Deutsche Bundesbank and BaFin have revised the LSI inspection schedule for 2020 in view of the coronavirus crisis. Since on-site inspections of institutions are currently not possible, inspections will instead be conducted off-site where possible.