As already reported in the previous BaFin FAQ on this topic, an issuer who is able to make a detailed forecast at a later date must, as a rule, publicly disclose this in the form of an ad hoc disclosure without undue delay.

In view of this exceptional situation in which an existing forecast is withdrawn and not replaced, BaFin assumes that the capital market will attach particular importance to this new forecast as it is the issuer’s first assessment following the withdrawal of the previous forecast and it can therefore be expected to attract considerable interest among reasonable investors. In deviation from the usual criteria set out in BaFin’s Issuer Guidelines, this new first-time forecast can therefore also be deemed to be price sensitive in light of the exceptional circumstances of the coronavirus crisis if it does not deviate significantly from the current consensus estimate. This would be the case particularly if the current consensus estimate as regards forecasts only has limited significance due to the current exceptional circumstances. If, on the other hand, the current consensus estimate comprehensibly reflects the market expectation, also in light of the uncertainties associated with the coronavirus crisis, it would still be permissible to use this consensus estimate as benchmark for determining the price sensitivity of such a forecast.

No. If a loan is postponed as part of a general payment moratorium, the counting of days past due within the meaning of Article 178(1)(b) will be suspended for the period subject to the general payment moratorium (BaFin Circular 3/2019 (BA) in conjunction with EBA/GL/2016/17, margin no. 18).

The “unlikely to pay” criteria as part of the definition of default under Article 178(1)(a) of the CRR requires a case-by-case assessment: the basis for the institution’s assessment are the obligor’s payment obligations towards the institution in accordance with the postponement as stipulated by the general payment moratorium. If an obligor receives support from a third party, e.g. through rent reductions or public grants, this is also taken into consideration in the assessment by the institution.

For the registers of guarantee assets under section 126 of the VAG, the 31 March 2020 deadline for submission is being suspended for now. Registers of assets can additionally be submitted by e-mail and in advance (by encrypted e-mail/SecureMail to the address va34@bafin.de). Submitting the register of assets by e-mail will not exempt an insurance undertaking from the paper form requirement; for legal reasons (requirement to submit a copy under section 126 (2) of the VAG), it is currently not permitted to waive this requirement. The register must be submitted in paper form by 30 June 2020.

1. Consent to disposal of an asset held as a guarantee asset by e-mail or fax

Circular 3/2016 (VA) and the corresponding FAQ dated 7 December 2018 only allow for the prior written consent of the guarantee assets trustee or their deputy (hereinafter referred to as the “trustee”) to disposal of an asset held as a guarantee asset to be given by e-mail or fax in the case of urgent sales. In all other cases, in line with this Circular/FAQ, the trustee must give prior written consent to disposal of an asset held as a guarantee asset in accordance with section 129 (3) of the VAG.

Against the backdrop of the coronavirus pandemic in Germany and in view of the associated risk of infection with the virus, BaFin will, until further notice, raise no objections if the trustee, in compliance with the above FAQ,

a) gives their prior written consent to the disposal of the asset held as a guarantee asset by e-mail or fax, even in cases that do not constitute urgent sales and,
b) without delay, subsequently provides notification of their written consent following the disposal of the asset.

2. Temporary failure to secure documents by means of double-locking and to hand over documents held by means of double-locking

Against the backdrop of the coronavirus pandemic in Germany and in view of the associated risk of infection with the virus, BaFin will, until further notice, raise no objections if the trustee

a) fails to secure documents by means of double-locking (see sections 3.5.3.1, 3.5.3.3 and 3.5.4.1 of circular 3/2016 (VA)) within 10 days (see section 3.5.6 of Circular 3/2016 (VA)) following entry of the relevant guarantee asset in the register of guarantee assets, if:

• the documents in question are not the guarantee assets themselves, but rather documents that serve to attest or secure the guarantee assets, or to facilitate enforcement,
• the insurance undertaking/the pension fund holds these documents in a safe place, and
• the documents are secured by means of double-locking by the trustee when the crisis situation associated with the coronavirus pandemic is resolved.

b) fails to hand over documents that are secured by means of double-locking, if:

• the party entitled to handover of the documents is in agreement, and
• the trustee hands over the documents held by means of double-locking when the crisis situation associated with the coronavirus pandemic is resolved.

To avoid the necessity of emergency sales under supervisory law in order to ensure compliance with the proportion of real estate held through investment funds, and to safeguard the stability of the financial market, BaFin will not raise any objections to a temporary passive exceedance of the proportion of real estate held through investment funds under section 3 (5) of the AnlV. For as long as this proportion is exceeded, however, no new investments of this type will be permitted.

EIOPA has decided to move the date for the holistic impact assessment for the current Solvency II review back two months, to 1 June 2020.

BTO 2.2.1, item 3 of the MaRisk contains provisions regarding trades that take place outside the business premises. This provision states that trades outside the business premises are permissible only insofar as this is clearly regulated by the institution and all transactions are appropriately documented. Organisational and technical problems might arise if, at short notice and by way of an exception, trading is to be conducted outside the business premises by staff working from home.

In BaFin’s view, the wording of the MaRisk allows for the strict rules regarding trading to be relaxed temporarily in response to the crisis in order to allow staff to work from home; furthermore, BaFin considers this at least reasonable from a supervisory perspective, and perhaps even necessary in crisis situations as part of contingency planning within the meaning of AT 7.3. In the event that access to office and trading spaces is prevented, it is necessary to provide for an alternative arrangement in order to maintain business operations. All necessary precautionary measures and controls can and should be implemented electronically. To the extent that this is not possible at short notice, institutions should endeavour to make use of the best possible alternative processes. On a temporary basis and in the context of the coronavirus crisis, BaFin will not raise objections to breaches in this regard.

On 4 December 2020, the ECB published a follow-up “Dear CEO letter” on its website in which it further specified its supervisory expectations towards institutions with regard to the identification and measurement of credit risk. In this letter, the ECB makes it clear that it expects institutions to implement the supervisory requirements and follow the prudential accounting standards in full. BaFin shares this view. Many of the requirements cited in this letter have already been stipulated in the relevant supervisory regulations (such as the MaRisk). In the following, BaFin would like to emphasise a few points. Please note that this is not an exhaustive list: all measures conducive to the adequate assessment, classification and measurement of credit risks should be taken.

• Correct identification of forborne exposures (forbearance) in the risk management systems of banks (and of exposures subject to a moratorium); here BaFin expects that institutions analyse their loans (including in retail banking) with regard to obligors’ financial difficulties and forbearance triggers.
• Regular and prompt assessment of unlikeliness to pay, taking all available information into account (including exposures subject to a general payment moratorium); information about commercial borrowers should be updated regularly, and institutions should enquire about the employment status of private borrowers, for example. Third-party guarantees do not relieve institutions of their obligation to review the solvency of their customers.
• From a risk management perspective, recording any significant increases in credit risk at an early stage so that institutions can take appropriate countermeasures, and appropriate consideration of identified credit risks in setting provisions for prudential purposes; here institutions may have to adapt their internal processes.
• Estimation of provisions using realistic parameters and assumptions which are appropriate for the current environment (this includes not only past data, but also forecasts of potential losses from identified risks).
• Decision-makers at the institutions (in particular the management bodies) must be aware of the current situation and of key credit risk developments at all times.
  To this end, institutions must take the necessary precautions in terms of their organisation and staffing in order to identify any increases in risks taken, and must also introduce risk management functions, corresponding assessments, and monitoring. The internal audit function must assess these precautions.
• Institutions are also expected to obtain an overview of the impacts of the pandemic, for example on their portfolios, increases in non-performing loans, provisions and the capital situation, and to be able to demonstrate how they are reacting to such impacts. For smaller institutions, these requirements are to be implemented in proportion to the size of the institution.

In line with the note regarding quarterly financial statements for the period ended 31 March 2020, BaFin and the Deutsche Bundesbank still share the view of the IDW that the current situation need not lead to an undifferentiated, automatic transfer of financial instruments from Stage 1 to Stage 2 or even Stage 3. At the same time, it would also not be appropriate to leave these financial instruments in Stage 1 without a differentiated assessment.

The IDW is of the view that the uncertainties with regard to future developments are gradually decreasing since it is becoming apparent that the present crisis will continue over a longer period of time. As a result, credit risk models are currently being updated with regard to the calculation of expected credit losses and transfer between stages. Post-model adjustments should only be of a temporary nature. As at 30 June 2020, the IDW assumes that risk provisioning under IFRS 9 will be further increased. BaFin and the Deutsche Bundesbank share this view.

The complete IDW technical note can be accessed at: https://www.idw.de/idw/im-fokus/coronavirus (only in German).

BaFin and the Deutsche Bundesbank will raise no objections if annual financial statements for the period ended 31 December 2019 and for the period ended 31 December 2020 are not submitted in paper form, provided a digital version is submitted.