PRA Requests Update on Adoption of Recommendations on ECL Disclosures
PRA issued a letter requesting an update on the progress in adopting the recommendations of the Taskforce on Disclosures about expected credit losses (ECLs). The letter has been issued from Victoria Saporta, Executive Director, Prudential Policy, to the Chief Financial Officers. In the letter, firms are also expected to inform PRA about the plans for adopting the recommendations that have not been adopted in full so far. Responses from firms will help PRA in its work toward encouraging UK banks to embrace the objective underlying the Taskforce’s work, which is the provision of a high-quality, comprehensive, and comparable set of ECL disclosures.
The Taskforce on Disclosures about Expected Credit Losses has issued two reports on what good ECL disclosures. The first report, which was published in November 2018, sets out recommendations on a comprehensive set of IFRS 9 ECL disclosures. A year later, the Taskforce issued a second report that amended the recommendations in the first report and supplemented those consolidated recommendations with material intended to be helpful in guiding firms toward disclosure formats that are broadly harmonized. In its letter in January 2019, PRA had mentioned that it expects firms to adopt these recommendations in full, consistent with the commitments made in the British Bankers’ Association Code for Financial Reporting Disclosure (BBA Disclosure Code). Firms were encouraged to make progress as quickly as possible and informed that PRA would from time-to-time be asking firms to update on that progress. Thus, PRA is requesting an update on how firms have, to date, responded to that material and what are the plans for responding to it in the future. The letter mentions that providing this information is voluntary.
PRA published another letter that is addressed to the Non-Executive Directors who participated in the PRA pilot program of virtual meetings with PRA Senior Advisors that took place in 2020. The objective of these meetings was to provide an informal opportunity to discuss issues and risks that were on board agendas. The meetings addressed, among others, the effect of economic downturn on business models, operational resilience in light of the new working environment, governance challenges, supervisory approach to climate-related financial risks, and feedback, to PRA, on the regulatory landscape. One of the conclusions of these discussions, as stated in the letter, is that it is clear that coronavirus and its aftermath will continue to create uncertainty in the banking and insurance sectors.
Related Links
Keywords: Europe, UK, Banking, ECL, IFRS 9, Climate Change Risk, Governance, Accounting, Financial Instruments, Disclosures, PRA
Featured Experts
Metin Epözdemir
Metin Epözdemir helps European and African banks with design and implementation of credit risk, stress testing, capital management, and credit loss accounting solutions.
Masha Muzyka
CECL, IFRS 9, and IFRS 17 expert; credit risk and insurance risk specialist; strategic planning and credit analytics solutions consultant
Anna Krayn
CECL adoption expert; engagement manager for loss estimation, internal risk capability enhancement, and counterparty credit risk management
Previous Article
FDIC Finalizes Rule to Resolve Double-Counting Associated with CECLRelated Articles
BIS Quarterly Review Discusses Developments in Fintech and ESG Space
BIS published the September issue of the Quarterly Review, which contains special features that analyze the rapid rise in equity funding for financial technology firms, the effectiveness of policy measures in response to pandemic, and the evolution of international banking.
BCBS to Consult on Supervisory Practices for Climate Risks by Year-End
The Basel Committee for Banking Supervision (BCBS) met in September 2021 and reviewed climate-related financial risks, discussed impact of digitalization, and welcomed efforts by the International Financial Reporting Standards (IFRS) Foundation to develop a common set of sustainability reporting standards
OCC Identifies Operational Risk Deficiencies in MUFG Union Bank
The Office of the Comptroller of the Currency (OCC) issued a Cease and Desist Order against MUFG Union Bank for deficiencies in technology and operational risk governance.
EC Rule on Contractual Recognition of Write Down and Conversion Powers
The European Commission (EC) published the Delegated Regulation 2021/1527 with regard to the regulatory technical standards for the contractual recognition of write down and conversion powers.
ECB to Consider Climate Risks When Reviewing Collateral Framework
In a response to the questions posed by a member of the European Parliament, the President Christine Lagarde highlighted the commitment of the European Central Bank (ECB) to an ambitious climate-related action plan along with a roadmap, which was published in July 2021.
SRB Provides Update on Approach to Prior Permissions Regime
The Single Resolution Board (SRB) published a Communication on the application of regulatory technical standard provisions on prior permission for reducing eligible liabilities instruments as of January 01, 2022.
APRA Issues Further Guidance on Application of Securitization Standard
The Australian Prudential Regulation Authority (APRA) published a new set of frequently asked questions (FAQs) to provide guidance to authorized deposit-taking institutions on the interpretation of APS 120, the prudential standard on securitization.
ACPR Publishes Corrective Version of RUBA Taxonomy
The French Prudential Control and Resolution Authority (ACPR) published the corrective version of the RUBA taxonomy Version 1.0.1, which will come into force from the decree of January 31, 2022.
Nordea Bank and EIB Sign Agreement to Fund Green Projects in Nordics
The European Commission (EC) announced that Nordea Bank has signed a guarantee agreement with the European Investment Bank (EIB) Group to support the sustainable transformation of businesses in the Nordics.
APRA Publishes FAQs on Capital Treatment of Overseas Subsidiaries
The Australian Prudential Regulation Authority (APRA) published a new set of frequently asked questions (FAQs) to clarify the regulatory capital treatment of investments in the overseas deposit-taking and insurance subsidiaries.
