The FDIC Chair Jelena McWilliams wrote a letter to FASB urging a delay in transitions to, and exclusions from, certain accounting rules. She suggests exclusion of COVID-19-related modifications from being considered a concession when determining a troubled debt restructuring classification and granting financial institutions that are subject to the current expected credit losses (CECL) methodology an option to postpone implementation of CECL, given the current economic environment. For the country's community banks, she also suggested imposing a moratorium on the effective date for the institutions that are not currently required to implement CECL to allow these financial institutions to focus on immediate business challenges relating to the impact of the current pandemic and its effect on the financial system.
In view of the ongoing unprecedented challenges resulting from COVID-19, FDIC is concerned that the scheduled introduction of recently enacted accounting standards may strain the ability of financial institutions to serve their depositors and prudently meet the credit needs of their communities. Institutions will face unique difficulties, over the coming weeks and months, to adequately staff customer-facing functions; ensure that deposit, loan, and IT systems operate normally; help borrowers that are experiencing unanticipated cash flow difficulties; and address the earnings and capital implications of near zero percent interest rates; and a potential surge in borrowers who are unable to meet contractual payment terms. In her letter, she encouraged "FASB to take these much needed actions to allow banks to help their communities at this time of need."
Keywords: Americas, US, Accounting, Banking, CECL, IFRS 9, Troubled Debt Restructuring, NPLs, COVID 19, FASB, FDIC
BIS Innovation Hub published the work program for 2021, with focus on suptech and regtech, next-generation financial market infrastructure, central bank digital currencies, open finance, green finance, and cyber security.
In an article published by SRB, Mairead McGuinness, the European Commissioner for Financial Services, Financial Stability, and Capital Markets Union, discussed the progress and next steps toward completion of the Banking Union.
EBA finalized the two sets of draft regulatory technical standards on the identification of material risk-takers and on the classes of instruments used for remuneration under the Investment Firms Directive (IFD).
EC published, in the Official Journal of the European Union, a notification that the European Court of Auditors (ECA) has published a special report on resolution planning in the Single Resolution Mechanism.
BoE published a scenario against which it will be stress testing banks in 2021, in addition to setting out the key elements of the 2021 stress test, guidance on the 2021 stress test, and the variable paths for the 2021 stress test.
PRA published a consultation paper (CP3/21) proposes rules regarding the timing of identity verification required for eligibility of depositor protection under the Financial Services Compensation Scheme (FSCS).
FSB published the work program for 2021, which reflects a strategic shift in priorities in the COVID-19 environment.
FCA announced that 50% firms have started using the new data collection platform RegData, which is slated to replace the existing platform known Gabriel.
Bundesbank published Version 5.0 of the derivation rules for completeness check at the form level, with respect to the data quality of the European harmonized reporting system.
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.