In response to the COVID-19 crisis, and in line with international and European authorities (in particular the European Central Bank (ECB) and European Banking Authority (EBA)), French authorities have taken a series of measures to modify and adapt the regulatory framework applicable to financial institutions operating in the banking sector in order to better cope with the effects of the crisis.

The French State is implementing a comprehensive plan to support the economy, with the support of the Banque de France and BPI France (the French public investment bank), and within the framework authorised by the European Commission. It has also set up a solidarity fund for the most affected companies and a system of guaranteed loans designed to provide a guarantor for companies applying to banks for credit in connection with the crisis. In addition, the French Banking Federation (FBF) and the main banks are communicating on the impact of the crisis and the various measures they are taking to minimise this impact.

In particular, the FBF, jointly with BPI France, and the French Minister of the Economy and Finance have announced the launch of state-guaranteed loans as of 25 March 2020. This measure enables the State to guarantee loans worth 300 billion euros, i.e. nearly 15% of France's gross domestic product.

Accordingly, until 31 December 2020, companies of any size, regardless of their legal form, with the exception of non-trading property companies, credit institutions and finance companies, will be able to apply to their bank for a state-guaranteed loan to support their cash flow. This loan may represent up to three months of 2019 turnover, or two years of payroll for innovative companies or companies created since 1 January 2019. No repayment will be required in the first year and the company may choose to amortize the loan over a maximum period of five years.

In addition, banks have undertaken to review all loan applications submitted to them and distribute the state-guaranteed loans at cost price to relieve the cash flow of companies and professionals without delay. It should be noted that as of 15 May 2020, more than €77 billion in state-guaranteed loans had already been granted to 425,612 companies.

Finally, the High Council for Financial Stability (HCSF) has taken the decision to reduce the counter-cyclical capital buffers to zero. The French Autorité de contrôle prudentiel et de résolution (ACPR) following the recommendations of the EBA, has decided to temporarily loosen the dates for the submission of prudential reporting statements for entities of the banking sector as well as to require institutions not to pay dividends. This initiative is also in line with the measures presented by the Minister of the Economy and Finance, which require companies that have benefited from cash support measures from the State not to distribute dividends in 2020.