EU Insight, 3 April 2020

BANKS AND INSURERS URGED TO SUSPEND DIVIDENDS PAYOUTS DUE TO COVID-19

This week, the European Insurance and Occupational Pensions Authority (EIOPA) urged insurers to temporarily suspend all discretionary dividend distributions and share buy backs and to apply a prudent approach also to the variable remuneration policies. EIOPA followed the example set by the European Central Bank (ECB), which last week recommended that, in light of the COVID-19 crisis, euro area banks not pay dividends or buyback of shares at least until 1 October 2020. The ECB asked credit institutions that are unable to comply with this recommendation because they consider themselves legally required to pay-out dividends to immediately explain the underlying reasons to their joint supervisory team.

COMMISSION PROPOSES €100 BILLION TEMPORARY UNEMPLOYMENT REINSURANCE SCHEME

The European Commission presented its proposal for a Council Regulation on the establishment of a temporary Support to mitigate Unemployment Risks in an Emergency (SURE). The new instrument proposes a €100 billion solidarity instrument to complement or contribute to the creation of national short-term unemployment schemes in the form of loans and is open to all 27 Member States. SURE, which will require Member States to provide guarantees for €25 billion, does not anticipate the establishment of a future permanent unemployment reinsurance scheme, but is without prejudice to the possible subsequent establishment thereof. The proposal will be discussed among Finance Ministers next week.

EU-UK JOINT COMMITTEE FIRST MEETING PUTS PRESSURE ON THE UK

The first meeting of the EU-UK Joint Committee was held this week via teleconference. The Joint Committee was established under the Brexit Withdrawal Agreement which was agreed in October 2019 and its function is to work out the practical implementation of, notably, the Northern Ireland protocol and citizens’ rights. The outcome of the meeting was that the EU and UK launched the work of the six Specialised Committees for the implementation of the Withdrawal Agreement, with a particular focus on speeding up the work of the Specialised Committee on the Northern Ireland Protocol. The next meeting of the Joint Committee is scheduled for June.

COMMISSION PUSH TO ENSURE CROSS-BORDER MOVEMENT OF CRITICAL WORKERS

The European Commission issued two COVID-19-related Communications, providing guidance on the free movement of ‘’critical workers’’ across the EU and on the implementation of the restriction on non-essential travel to the EU. The former aims at harmonising Members States’ definition of essential economic activities and critical occupations. It provides guidance on the workers for which free movement across the EU is essential, urging Member States to establish special border procedures that would ensure smooth passage for such workers. As for the latter, it provides guidance to border guards and visa authorities, addressing key issues such as: i) criteria for refusing entry, ii) exemptions, iii) security, and iv) exit checks.

EU ALLOCATES NEW FUNDS TO SUPPORT SYRIAN REFUGEES AMIDST COVID-19 PANDEMIC

The Operational Board of the EU Trust Fund in Response to the Syrian Crisis decided to strengthen its support for refugees from Syria and vulnerable persons in Iraq, Jordan, and Lebanon, by raising the level of funds allocated to the EU Trust Fund. In particular, some additional €240 million have been allocated, increasing the total level of funds committed for the EU Trust Fund to more than €2 billion. The new funds will help the local populations to face the immediate COVID-19 pandemic challenge. They will improve education, gender equality, child protection, public health, resilience of vulnerable local households, quality of life and peace building.

COMING UP NEXT WEEK

• 6 April: Video conference of foreign affairs ministers (defence). On the agenda: military implications of the COVID-19 pandemic.
• 6 April: Video conference of ministers of justice. On the agenda: measures introduced by member states in the field of justice in response to the COVID-19 pandemic.
• 7 April: Video conference of the Eurogroup. On the agenda: coordinated response to the economic fallout of the COVID-19 pandemic
• 7 April: Video conference of ministers of research.
• 8 April: Video conference of foreign affairs ministers (development).
• 8 April: Video conference of ministers of culture. On the agenda: impact of the COVID-19 pandemic in the culture and creative sectors.

Karl Isaksson, Managing Partner Brussels, Kreab