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LONDON, March 30 (Reuters) – The European Union wants to give as much operational relief to banks as possible when dealing with losses on loans during the coronavirus epidemic and could consider further steps, a European Commission official said on Monday.
Regulators in the EU have offered flexibility on how a loan loss accounting rule known as IFRS 9 is applied but the United States has gone further and offered banks a two-year holiday from its equivalent rule.
“We continue to monitor the situation and the enforcement of existing flexibility in order to consider next steps,” a commission official said.
“Our objective is to provide as much operational relief as possible to banks, within the existing framework. IFRS9, and the definition of ‘default’ under the prudential framework, already provide a large degree of flexibility.”
“Needless to say that the Commission is participating in discussions at international level, as it is important to coordinate our actions with our international partners,” the commission official said.
Banking industry officials said that while EU regulators have expressed support for banks to interpret the accounting rule in a flexible way during the pandemic, this guidance remains at the conceptual level.
“The message of support of U.S. authorities has been blunter and definitely more forceful,” said one banking official.
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