Central Bank relaxes reporting requirements for banks amid Covid-19 crisis

The Central Bank has granted banks, fund managers and insurers brief respite in meeting deadlines for a series of regular regulatory reports, as supervisors and financial firms focus on more immediate challenges posed by the Covid-19 pandemic.

“The Central Bank recognises that regulated firms are under significant organisational stress and that some limited and time-bound regulatory flexibility may allow firms to better serve consumers, investors and the wider economy,” it said in a regulatory update posted on its website. It added that it still expected firms to meet their “regulatory and statutory obligations on an ongoing basis”.

The bank said it is placing an emphasis on requests for firms to file specific data relating to issues thrown up as they deal with the coronavirus crisis.

“Reliable supervisory reporting is crucial in times when the financial system faces many challenges caused by the Covid-19 outbreak,” it said. “While we aim to be measured and pragmatic with these data requests in terms of the type and frequency of requests, recognising the rapidly evolving nature of the situation we are faced with, we expect credit institutions to continue to engage constructively with us and respond to such requests in an expedient manner.”

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New borrowers

The relaxation of reporting requirements means that banks are being given an extra month, to June 12th, to report figures on large new borrowers in the first quarter, while deadlines for filings on funding plans, credit risk benchmarking, quarterly financial summary returns and a number of other issues have been extended.

The Central Bank has also said it will allow regulated firms – including banks, credit unions insurers and fund managers – to engage directly with their supervisors where they have difficulties as a result of Covid-19 in meeting deadlines for submitting plans on how they will deal with business risks previously outlined by regulators.

It comes at a time when banks are dealing with tens of thousands of household and business borrowers affected by the Covid-19 economic fallout who have sought payment breaks of up to three months on their loans. Banking & Payments Federation Ireland's chief executive, Brian Hayes, said last week the industry was in talks with the Central Bank about extending payment breaks to up to six months.

Economic contraction

Both sides will have to work through the implications of such an extension for borrowers’ credit ratings and banks’ non-performing loan portfolios and bad-debt provisions, as the rapid contraction of the economy will inevitably lead to an increase in outright defaults.

The Central Bank had previously written to insurers at the end of March to offer a degree of flexibility on reporting and disclosure deadlines, following guidelines from the European Insurance and Occupational Authority.

The bank is currently engaging heavily with general insurers on the issue of business interruption insurance, amid concerns that firms are largely relying on technicalities and fine print to avoid payouts on policies that offered infectious diseases cover.