Kuwait’s Central Bank Is Said to Extend Virus Relief Until June
(Bloomberg) -- Kuwait’s central bank has extended until the end of June the support measures it introduced last year to help lenders cope with the coronavirus pandemic, according to people familiar with the decision.
The amendments will be reviewed by the central bank’s board of directors to decide if another extension is needed beyond June or whether the requirements should revert to their pre-crisis levels, the regulator told lenders in a circular seen by Bloomberg and confirmed by the people. They declined to be identified discussing confidential matters.
The program, which unlocks extra liquidity and allows for regulatory flexibility, was originally in effect until end-2020. The extension will help banks in “stimulating productive economic sectors by continuing to extend financing facilities and providing liquidity to them in these stressful circumstances,” Governor Mohammed Al-Hashel said in the circular.
Read more: Monetary Support for Kuwaiti Banks Isn’t Enough
Central bank officials didn’t immediately respond to a request for comment.
Banks in Kuwait are additionally vulnerable to a fiscal crisis that’s prompted Fitch Ratings this month to cut the outlook on the government’s debt rating to negative from stable as a reflection of “near-term liquidity risk.” The credit assessor followed with the same decision on the outlooks of 11 Kuwaiti banks.
The regulatory measures include:
- Decreasing minimum limit for Liquidity Coverage Ratio to 80% from 100%
- Decreasing prescribed minimum limit for Net Stable Funding Ratio to 80% from 100%
- Decreasing minimum limit for Regulatory Liquidity Ratio to 15% from 18%
- Capital Adequacy Ratios:
- Minimum capital requirement in its comprehensive input lowered to 10.5% from 13%
- Minimum capital base to 8.5% from 11%
- Minimum shareholders equity to 7% from 9.5%
- Reducing risk weight to the SME portfolio to 25% from 75%
©2021 Bloomberg L.P.