FSI Paper on Identification and Measurement of Non-Performing Assets
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
BIS and Central Banks Experiment with GenAI to Assess Climate Risks
A recent report from the Bank for International Settlements (BIS) Innovation Hub details Project Gaia, a collaboration between the BIS Innovation Hub Eurosystem Center and certain central banks in Europe
Nearly 25% G-SIBs Commit to Adopting TNFD Nature-Related Disclosures
Nature-related risks are increasing in severity and frequency, affecting businesses, capital providers, financial systems, and economies.
Singapore to Mandate Climate Disclosures from FY2025
Singapore recently took a significant step toward turning climate ambition into action, with the introduction of mandatory climate-related disclosures for listed and large non-listed companies
SEC Finalizes Climate-Related Disclosures Rule
The U.S. Securities and Exchange Commission (SEC) has finalized the long-awaited rule that mandates climate-related disclosures for domestic and foreign publicly listed companies in the U.S.
EBA Proposes Standards Related to Standardized Credit Risk Approach
The European Banking Authority (EBA) has been taking significant steps toward implementing the Basel III framework and strengthening the regulatory framework for credit institutions in the EU
US Regulators Release Stress Test Scenarios for Banks
The U.S. regulators recently released baseline and severely adverse scenarios, along with other details, for stress testing the banks in 2024. The relevant U.S. banking regulators are the Federal Reserve Bank (FED), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC).
Asian Governments Aim for Interoperability in AI Governance Frameworks
The regulatory landscape for artificial intelligence (AI), including the generative kind, is evolving rapidly, with governments and regulators aiming to address the challenges and opportunities presented by this transformative technology.
EBA Proposes Operational Risk Standards Under Final Basel III Package
The European Union (EU) has been working on the final elements of Basel III standards, with endorsement of the Banking Package and the publication of the European Banking Authority (EBA) roadmap on Basel III implementation in December 2023.
EFRAG Proposes XBRL Taxonomy and Standard for Listed SMEs Under ESRS
The European Financial Reporting Advisory Group (EFRAG), which plays a crucial role in shaping corporate reporting standards in European Union (EU), is seeking comments, until May 21, 2024, on the Exposure Draft ESRS for listed SMEs.
ECB to Expand Climate Change Work in 2024-2025
Banking regulators worldwide are increasingly focusing on addressing, monitoring, and supervising the institutions' exposure to climate and environmental risks.
