April 10, 2018

FSI of BIS published a paper on the identification and measurement of non-performing assets (NPAs). The paper focuses on the role that prudential regulation and supervision can play in facilitating the prompt identification and measurement of NPAs, by taking stock of cross-country practices.

The paper takes stock of NPA identification and measurement practices across select jurisdictions and identifies a number of regulatory and supervisory policy considerations that may be useful to supervisory authorities. It first outlines applicable accounting standards on NPA identification and measurement and summarizes the recent BCBS guidance on the prudential treatment of problem assets. Then, it discusses the key takeaways of the FSI survey on NPA identification and measurement practices across sampled jurisdictions. Next, the paper sets out policy options that supervisors may consider to enhance their NPA identification and measurement process. Finally, the paper provides brief concluding remarks, followed by an Annex that provides detailed information on NPA identification and measurement in the sampled countries.

The study reveals considerable differences across jurisdictions in the applicable accounting standards, which are exacerbated by divergent prudential frameworks that govern NPA identification and measurement. These differences make it difficult to make meaningful comparisons—both within and across jurisdictions—on key asset quality metrics, which are often a driver of a bank’s overall financial condition and operating performance. 

 

Related Links

Keywords: International, Banking, Accounting, NPLs, Identification and Measurement, Impairment, ECL, CECL, NPA, FSI, BIS

Related Articles
News

APRA Releases Minor Changes to Reporting Standards on SA-CCR for Banks

APRA released minor changes to the three reporting standards for the standardized approach for measuring counterparty credit risk exposures (SA-CCR).

May 22, 2019 WebPage Regulatory News
News

APRA Proposes to Amend Guidance on Residential Mortgage Lending

APRA is consulting on revisions to the prudential practice guide APG 223 on residential mortgage lending in Australia.

May 21, 2019 WebPage Regulatory News
News

ESAs Amend Technical Standards on Mapping of ECAIs Under CRR

ESAs published a second amendment to the implementing technical standards on the mapping of credit assessments of External Credit Assessment Institutions (ECAIs) for credit risk under the Capital Requirements Regulation (CRR).

May 20, 2019 WebPage Regulatory News
News

OCC Consults on Information Collection for Home Mortgage Disclosures

OCC is soliciting comment on the revision of the information collection titled “Regulation C—Home Mortgage Disclosure.” OCC also notes that it has sent the collection to OMB for review.

May 20, 2019 WebPage Regulatory News
News

EIOPA Updates Q&A on Regulations in May 2019

EIOPA published additional questions and answers (Q&A) on guidelines, directives, and regulations applicable to insurers in Europe.

May 17, 2019 WebPage Regulatory News
News

FSB Publishes Update on Meeting of RCG for Americas

FSB published a summary of the meeting of its Regional Consultative Group (RCG) in Americas.

May 17, 2019 WebPage Regulatory News
News

ESRB Paper on Impact of Business Model Similarities on Risk Capture

ESRB published a working paper on whether information contagion and business model similarities explain bank credit risk commonalities.

May 17, 2019 WebPage Regulatory News
News

IASB Issues Work Plan and Meeting Updates for May 2019

IASB published an updated work plan, along with the update of its meeting in May 2019.

May 17, 2019 WebPage Regulatory News
News

FCA Publishes Its Business Plan for the Coming Year

FCA published its Business Plan, which sets out the main areas of focus and priorities for 2019/20.

May 17, 2019 WebPage Regulatory News
News

CBM Notifies ESRB and ECB on Imposing Borrower-Based Measures in Malta

CBM notified ESRB and ECB regarding its decision to impose borrower-based measures on lenders in Malta.

May 17, 2019 WebPage Regulatory News
RESULTS 1 - 10 OF 3103