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 Publishes Phase 2 of Technical Package on Reporting Framework 2.10

    EBA published phase 2 of the technical package on the reporting framework 2.10, providing the technical tools and specifications for implementation of EBA reporting requirements.

    July 10, 2020 WebPage Regulatory News
    News

    FASB Proposes to Delay Implementation of Insurance Contracts Standard

    FASB issued a proposed Accounting Standards Update that would grant insurance companies, adversely affected by the COVID-19 pandemic, an additional year to implement the Accounting Standards Update No. 2018-12 on targeted improvements to accounting for long-duration insurance contracts, or LDTI (Topic 944).

    July 09, 2020 WebPage Regulatory News
    News

    APRA Updates Regulatory Approach to Loan Deferrals Amid COVID Crisis

    APRA updated the regulatory approach for loans subject to repayment deferrals amid the COVID-19 crisis.

    July 09, 2020 WebPage Regulatory News
    News

    BCBS and FSB Set Out Recommendations for Benchmark Transition

    BCBS and FSB published a report on supervisory issues associated with benchmark transition.

    July 09, 2020 WebPage Regulatory News
    News

    IAIS Sets Out Recommendations for Benchmark Transition for Insurers

    IAIS published a report on supervisory issues associated with benchmark transition from an insurance perspective.

    July 09, 2020 WebPage Regulatory News
    News

    ESMA Updates Reporting Manual on European Single Electronic Format

    ESMA updated the reporting manual on the European Single Electronic Format (ESEF).

    July 09, 2020 WebPage Regulatory News
    News

    EBA Calls on Resolution Authorities to Consider Impact of COVID Crisis

    EBA published a statement on resolution planning in light of the COVID-19 pandemic.

    July 09, 2020 WebPage Regulatory News
    News

    BCBS Finalizes Revisions to Credit Valuation Adjustment Risk Framework

    BCBS Finalizes Revisions to Credit Valuation Adjustment Risk Framework

    July 08, 2020 WebPage Regulatory News
    News

    ECB Guideline on Materiality Threshold for Credit Obligations Past Due

    ECB published a guideline (2020/97), in the Official Journal of European Union, on the definition of materiality threshold for credit obligations past due for less significant institutions.

    July 08, 2020 WebPage Regulatory News
    News

    FED Temporarily Revises FR Y-14 With Respect to PPP and CARES Act

    FED temporarily revised the capital assessments and stress testing reports (FR Y-14A/Q/M) to implement the changes in response to the COVID-19 pandemic.

    July 08, 2020 WebPage Regulatory News
    RESULTS 1 - 10 OF 5458