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
BSP Tackles Aspects of Lending and Islamic, Open & Sustainable Finance
The Central Bank of the Philippines (BSP) issued communications covering developments related to online lending platforms, open finance framework and roadmap, and on the expected regulations in the area sustainable finance.
US Agencies Issue Regulatory Updates, FDIC Launches Tech Sprint
The Board of Governors of the Federal Reserve System (FED) published the final rule that amends Regulation I to reduce the quarterly reporting burden for member banks by automating the application process for adjusting their subscriptions to the Federal Reserve Bank capital stock, except in the context of mergers.
EBA Issues Guide on Bank Resolvability, Consults on Transferability
The European Banking Authority (EBA) published its assessment of risks through the quarterly Risk Dashboard and the results of the Autumn edition of the Risk Assessment Questionnaire (RAQ).
MFSA Publishes CRD5 Updates and Supervisory Priorities for 2022
The Malta Financial Services Authority (MFSA) updated the guidelines on supervisory reporting requirements under the reporting framework 3.0.
HKMA Extends Repayment for Trade Facilities, Consults on Crypto-Assets
The Hong Kong Monetary Authority (HKMA) published a circular, along with the reporting form and instructions, for self-assessment, by authorized institutions, of compliance with the Code of Banking Practice 2021.
FCA Registers Securitization Repositories; PRA Issues 2022 Priorities
The Financial Conduct Authority (FCA) decided to register European DataWarehouse Ltd and SecRep Limited as securitization repositories under the UK Securitization Regulation, with effect from January 17, 2022.
EC Regulation Sets Out Methods for Measuring K-Factors Under IFR
The European Commission (EC) published the Delegated Regulation 2022/25, which supplements the Investment Firms Regulation (IFR or Regulation 2019/2033) with respect to the regulatory technical standards specifying the methods for measuring the K-factors referred to in Article 15 of the IFR.
BIS Studies How Platform Models Impact Financial Stability & Inclusion
The Bank of International Settlements (BIS) published a paper that assesses the ways in which platform-based business models can affect financial inclusion, competition, financial stability and consumer protection.
CBE Issues Additional Measures to Ease Disruptions from Pandemic
The Central Bank of Egypt (CBE) published a circular with instructions on emergency liquidity assistance to banks that are unable to meet their liquidity requirements.
ESAs Publish List of Financial Conglomerates for 2021
The European Supervisory Authorities (ESAs) published the list of identified financial conglomerates for 2021.
