EU may help banks more with loan losses due to pandemic

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Regulators in the EU have offered flexibility on how a loan loss accounting rule 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.”