BCBS released a technical amendment on additional Pillar 3 disclosure requirements for the jurisdictions implementing an expected credit loss (ECL) accounting model as well as for the jurisdictions adopting transitional arrangements for the regulatory treatment of accounting provisions. The application of ECL accounting models and introduction of any transitional arrangements took effect from January 01, 2018. The additional amendments to the Pillar 3 standard will, therefore, come into effect from January 01, 2019 and are applicable for banks using an ECL accounting model after this date as well as for the banks using transitional arrangements for the regulatory treatment of accounting provisions.
The amendment is intended to provide users with disclosures that fully reflect any transitional effects for the impact of ECL accounting on regulatory capital as well as to provide further information on the allocation of accounting provisions in the regulatory categories of general and specific provisions for standardized exposures during the interim period. The following disclosures in the Pillar 3 standard will apply:
- Template KM2 (Key metrics—Total Loss-Absorbing Capacity (TLAC) requirements at resolution group level). Additional disclosures require banks to disclose the “fully loaded” impact of ECL transitional arrangements used in TLAC resources and ratios.
- Template CR1 (Credit quality of assets). Given that the existing regulatory distinction between general provisions and special provisions does not directly correspond to how provisions would be measured under the new ECL accounting standards, additional disclosures are required on the allocation between general and specific provisions for standardized approach exposures.
- Table CRB (Additional disclosures related to credit quality of assets). This amendment accompanies those related to CR1. Banks are required to disclose the rationale for their categorization of ECL accounting provisions in general and specific categories for standardized approach exposures. The revised templates are in Annex 1.
Annex 1 to the technical amendment contains revised Template KM2, Template CR1, and Table CRB. Technical amendments are defined as changes in standards that are not substantial in nature but that cannot be unambiguously resolved based on the current text.
Effective Date: January 01, 2019
Keywords: International, Accounting, Banking, Pillar 3, Disclosures, ECL, IFRS 9, Basel III, BCBS
Previous ArticleECB Publishes Services Procurement Guidelines for TIBER-EU Tests
FED finalized a rule that updates capital planning requirements to reflect the new framework from 2019 that sorts large banks into categories, with requirements that are tailored to the risks of each category.
ECB published results of the quarterly lending survey conducted on 143 banks in the euro area.
ESAs published the final draft implementing technical standards on reporting of intra-group transactions and risk concentration of financial conglomerates subject to the supplementary supervision in EU.
EBA published the annual report on asset encumbrance of banks in EU.
MAS revised the guidelines that address technology and cyber risks of financial institutions, in an environment of growing use of cloud technologies, application programming interfaces, and rapid software development.
FED updated the reporting form and instructions for the FR Y-9C report on consolidated financial statements for holding companies.
EBA issued a consultation paper on the guidelines on monitoring of the threshold and other procedural aspects of the establishment of intermediate EU parent undertakings, or IPUs, as laid down in the Capital Requirements Directive.
EC published Regulation 2021/25 that addresses amendments related to the financial reporting consequences of replacement of the existing interest rate benchmarks with alternative reference rates.
BIS published a bulletin, or a note, that examines the cyber threat landscape in the context of the pandemic and discusses policies to reduce risks to financial stability.
HM Treasury, also known as HMT, has updated the table containing the list of the equivalence decisions that came into effect in UK at the end of the transition period of its withdrawal from EU.