European Union banking regulators have delayed this year's stress test and eased some capital rules to avoid lenders turning off the taps to an economy reeling from the coronavirus pandemic.
The virus has already forced banks to operate from split sites or ask staff to work from home, forcing regulators across the world to look at ways to temporarily ease red tape.
"Banks need to be in a position to continue financing households and corporates experiencing temporary difficulties," said Andrea Enria, chair of the European Central Bank's supervisory arm, which temporarily dropped some capital requirements for lenders in the euro zone.
The European Banking Authority (EBA), which coordinates banking rules for European lenders across the EU, said it has postponed its stress test this year for big banks.
"For 2020, the EBA will carry out an additional EU-wide transparency exercise in order to provide updated information on banks' exposures and asset quality to market participants," the Paris-based watchdog said in a statement.
The Association for Financial Markets in Europe (AFME), a banking industry body, said the EU measures were sensible and would help banks support their customers.
"The ECB and EBA have swiftly delivered comprehensive packages under very challenging circumstances," added the European Banking Federation.
But shares in the sector fell sharply with the index of top euro zone lenders down 15% at its lowest level since Britain voted in 2016 to leave the EU as the ECB's broader package left markets underwhelmed.
The stress test involves banks collecting thousands of data points that are cross-checked. The EBA had been due to publish the results in July.
"It is logical that banks are being asked to focus on the very real stress facing the economy rather than diverting resources to a fictional exercise," said Rob Smith, a banking partner at consultants KPMG.
The Bank of England declined to comment on whether it would delay or scrap its own test of top UK lenders this year. It is expected to confirm on March 24 whether the test is still going ahead.
The EBA said non-essential visits by supervisors to banks could also be postponed and deadlines for reporting some data to regulators could be put back, recommendations the ECB said it will discuss with banks.
The ECB is allowing banks to operate with less capital than usual and easing back on the amount of liquidity they need to hold, a reference to cash and easily sellable debt to cover short term day-to-day funding.
Many lenders are holding well above the minimum level.
The ECB said these measures would be enhanced by national regulators relaxing their counter cyclical capital buffers that are built up in good times for release in downturns or market shocks.
ECB policymakers also approved fresh stimulus measures yesterday to help the euro zone cope with the "major shock" of coronavirus in an unprecedented synchronised move by its independent monetary and supervisory arms.
The Bank of England told UK lenders on Wednesday it was effectively scrapping this buffer until at least March 2022, giving banks more headroom to back loans of up to £190 billion.
Denmark said yesterday it would release this buffer for banks to raise an additional 200 billion Danish crowns for lending.
Sweden is also considering a cut to the buffer.
US Treasury Secretary Steven Mnuchin said on Wednesday that US regulators are looking at possible short-term actions.
The EBA stressed that lenders should still be "prudent" when paying dividends to investors and bonuses to staff.
"Banks should continue to apply sound underwriting standards, pursue adequate policies regarding the recognition and coverage of non-performing exposures, and conduct solid capital and liquidity planning and robust risk management," the ECB added.