Featured Product

    US Agencies Amend Regulatory Capital Rule to Allow Phase-In for CECL

    February 14, 2019

    US Agencies (FDIC, FED, and OCC) adopted the final rule to address changes to credit loss accounting under the U.S. generally accepted accounting principles; this includes banking organizations’ implementation of the current expected credit losses (CECL) methodology. The final rule becomes effective on April 01, 2019, although banking organizations may adopt the rule prior to this date. FED also issued a statement that provides additional information on positions that FED plans to take on incorporating the CECL accounting standard into its supervisory stress test and into its assessment of the company-run stress tests.

    The final rule provides banking organizations with the option to phase in, over a three-year period, the day-one adverse effects on regulatory capital that may result from the adoption of the new accounting standard. The rule also revises the regulatory capital rule, stress testing rule, and regulatory disclosure requirements of the US Agencies to reflect CECL and makes conforming amendments to other regulations that reference credit-loss allowances. In May 2018, the US Agencies issued a proposal that included amending certain rules to address the FASB's issuance of the Accounting Standards Update No. 2016-13, titled "Financial Instruments—Credit Losses" (ASU 2016-13). The consultation ended in July 2018. US Agencies received 25 comment letters from banking organizations, trade associations, public interest groups, and individuals. 

    FED announced that it will maintain the current modeling framework for loan allowances in its supervisory stress test through 2021. For the supervisory stress test and the Comprehensive Capital Analysis and Review (CCAR), FED will not alter its modeling framework, as it relates to CECL, for the 2019, 2020, and 2021 cycles. FED intends to evaluate appropriate future enhancements to the current framework, as best practices for implementing CECL are developed. Bank holding companies required to perform company-run stress tests as part of CCAR will be required to incorporate CECL into those stress tests starting from the 2020 cycle. However, FED will not issue supervisory findings on those firms' allowance estimations in the CCAR exercise through 2021.

     

    Related Links

    Effective Date: April 01, 2019

    Keywords: Americas, US, Banking, Accounting, IFRS 9, CECL, ASU 2016-13, Stress Testing, CCAR, US Agencies

    Featured Experts
    Related Articles
    News

    EBA Analyzes Impact of Unwind Mechanism of Liquidity Coverage Ratio

    EBA published a report analyzing the impact of the unwind mechanism of the liquidity coverage ratio (LCR) for a sample of European banks over a three-year period, from the end of 2016 to the first quarter of 2020.

    November 19, 2020 WebPage Regulatory News
    News

    ECB Outlines Views on Possible Changes to AnaCredit Rule and TLTROs

    In response to questions from a member of the European Parliament, the ECB President Christine Lagarde issued a letter clarifying the possibility of amending the AnaCredit Regulation and making targeted longer-term refinancing operations (TLTROs) dependent on the climate-related impact of bank loans.

    November 19, 2020 WebPage Regulatory News
    News

    IASB Begins First Phase of Post-Implementation Review of IFRS 9

    IASB started the post-implementation review of the classification and measurement requirements in IFRS 9 on financial instruments and added the review as a project to its work plan.

    November 18, 2020 WebPage Regulatory News
    News

    FSB Report Examines Progress in Resolvability of Systemic Institutions

    FSB published a report that examines progress in implementing policy measures to enhance the resolvability of systemically important financial institutions.

    November 18, 2020 WebPage Regulatory News
    News

    EBA Benchmarks National Insolvency Frameworks Across EU

    EBA published a report on the benchmarking of national loan enforcement frameworks across 27 EU member states, in response to the call for advice from EC.

    November 18, 2020 WebPage Regulatory News
    News

    FSB Reports Assess Impact of Pandemic on Financial Stability

    FSB published a letter from its Chair Randal K. Quarles, along with two reports exploring various aspects of the market turmoil resulting from the COVID-19 event.

    November 17, 2020 WebPage Regulatory News
    News

    RBNZ Consults on Implementation of Capital Review Changes

    RBNZ launched a consultation on the details for implementing the final Capital Review decisions announced in December 2019.

    November 17, 2020 WebPage Regulatory News
    News

    IASB Announces Andreas Barckow as the New Chair from July 2021

    The Trustees of the IFRS Foundation, which are responsible for the governance and oversight of IASB, have announced the appointment of Dr. Andreas Barckow as the IASB Chair, effective July 2021.

    November 17, 2020 WebPage Regulatory News
    News

    HKMA Consults on Capital Rules for Bank Equity Investments in Funds

    HKMA issued a letter to consult the banking industry on a full set of proposed draft amendments to the Banking (Capital) Rules for implementing the Basel standard on capital requirements for banks’ equity investments in funds in Hong Kong.

    November 17, 2020 WebPage Regulatory News
    News

    ESRB Supports Extension of Macro-Prudential Measure by Swedish FSA

    ESRB published an opinion assessing the decision of Swedish Financial Supervisory Authority (FSA) to extend the application period of a stricter measure for residential mortgage lending, in accordance with Article 458 of the Capital Requirements Regulation (CRR).

    November 17, 2020 WebPage Regulatory News
    RESULTS 1 - 10 OF 6153