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People walk in front of the Bank of England, as the number of coronavirus disease cases grow around the world, in London, U.K. on March 19, 2020.

Simon Dawson/Reuters

The Bank of England cancelled this year’s stress test of major banks on Friday and said it may be hard to implement new global capital rules on time given the focus now on supporting lending to customers hit by the coronavirus epidemic.

The decision to scrap the stress test of the country’s top eight banks followed a decision by the European Union to cancel its planned health check of leading lenders, which had also included top U.K. players like Barclays and HSBC.

“The recent 2019 stress test showed that the U.K. banking system was resilient to deep simultaneous recessions in the U.K. and global economies that are more severe overall than the global financial crisis, combined with large falls in asset prices and a separate stress of misconduct costs,” the BoE said in a statement.

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Last week the British central bank announced that banks could release all the capital they hold in a special “counter cyclical” buffer to support loans worth up to £190-billion ($320-billion).

The BoE’s Prudential Regulation Authority, which supervises banks, said on Friday that new capital rules from the global Basel Committee due to be phased in over coming years may also have to be pushed back.

“The PRA acknowledges that the existing Basel timetable may prove to be challenging, and is coordinating internationally to ensure that implementation will happen alongside other major jurisdictions,” the BoE said.

Banks in the euro zone in particular have lobbied hard to push back the remaining package of Basel capital rules and the EU has yet to approve laws to implement it.

The BoE also sought to ease pressure on lenders by delaying work on new rules. An assessment of liquidity at banks, which had been due to be completed mid-2020, has been paused until further notice, and a planned test next year of the ability of banks to cope with climate change is under review.

Banks have asked regulators for relief from a new accounting rule know as IFRS 9 that forces them to provision for expected losses on loans before they are actually incurred.

Due to the coronavirus pandemic, Britain is facing a sharp downturn, which typically increases the number of loans turning sour, raising the prospect of banks having to find more capital and suffering further hits to profits during an economic crisis.

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“The Bank continues to consider the potential interaction of COVID-19 with IFRS 9 ... and expects to provide further guidance to firms regarding our approach next week,” the BoE statement said.

Given the sudden onset of the virus, making reliable forward-looking judgments on possible losses from loans is “very challenging”, it added

If lenders make such judgements, they would note the “temporary nature of the shock” and fully take into account the significant measures, such as repayment holidays, that have been announced by the government to support the economy, it added.

The BoE’s financial policy committee, which has powers to order regulators to make changes to financial rules, is due on Tuesday to make a statement following its latest quarterly meeting.

The BoE also said it would postpone its joint survey with the Financial Conduct Authority into open-ended funds which had been expected to report back in June and propose rule changes.

The survey was partly triggered by the suspension and later closure of a flagship fund run by then star stock-picker Neil Woodford after it was unable to meet daily redemption requests, trapping hundreds of thousands of investors.

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Earlier this week several property funds suspended themselves after saying they could no longer value their real estate assets properly due to coronavirus uncertainty.

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