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FRANKFURT (dpa-AFX) – The European Central Bank (ECB) continues to accommodate banks in the Corona crisis. There is a temporary exception to the leverage ratio for institutions in the euro area: banks may exclude certain assets such as deposits with the central bank when calculating the ratio. This enables them to have a higher rate. The regulation applies until June 27, 2021, announced the ECB on Thursday in Frankfurt.
With the “leverage ratio”, the business of a bank is set in relation to the equity, regardless of the risk content. From June 28, 2021, the banks in the euro area should achieve a value of 3.0 percent according to the requirements of the supervisors. According to the ECB, based on data from the end of March 2020, the exemption that has now been adopted would increase the total debt ratio of 5.36 percent by around 0.3 percentage points.
The Governing Council, as the highest decision-making body of the central bank, justified the exception with the coronavirus pandemic, which hit all the economies of the euro area “in an unprecedented and profound way”. Therefore “the unimpaired functioning of the monetary policy transmission channel” via the banks is particularly important. In the view of the Governing Council, therefore, the condition of exceptional circumstances “which justify the temporary exclusion of certain exposures to central banks from the calculation” is met.
The supervisors in the euro area had already temporarily relaxed their capital requirements for banks due to the Corona crisis. Other central banks such as the Fed in the USA, for example, relaxed the indebtedness rules for large institutions.
The ECB has been supervising the largest banks and banking groups in the euro area directly since November 2014, currently 115 institutions, which represent almost 82 percent of the market in the currency area of the 19 countries./ben/stw/DP/eas