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    BCBS Consults on Amendment to Pillar 3 Disclosures for ECL Provisions

    March 22, 2018

    BCBS proposed a technical amendment on Pillar 3 disclosure requirements for regulatory treatment of accounting provisions. The amendment to the rules text is related to additional Pillar 3 disclosure requirements for the jurisdictions implementing an expected credit loss (ECL) accounting model and for jurisdictions adopting transitional arrangements for the regulatory treatment of accounting provisions. Comments are invited on the proposed amendment by May 04, 2018.

    BCBS proposed the following technical amendment to the Pillar 3 standard and the revised templates have been included in Annex 1:

    • Template KM2 (Key metrics: Total Loss-Absorbing Capacity requirements at resolution group level). Additional disclosure requirements are proposed to require banks to disclose the “fully loaded” impact of ECL transitional arrangements used in TLAC resources and ratios.
    • Template CR1 (Credit quality of assets). Given that the existing regulatory distinction between general provisions and special provisions does not correspond to how provisions would be measured under the new ECL accounting standards, additional disclosure requirements are proposed on the allocation between general and specific provisions for standardized approach exposures.
    • Table CRB (Additional disclosures related to credit quality of assets). This amendment accompanies those related to CR1. Banks are required to disclose the rationale for their categorization of accounting provisions in general and specific categories for standardized approach exposures. 

    Technical amendments are defined as changes in standards that are not substantial in nature but that cannot be unambiguously resolved based on the current text. As the application of ECL accounting models and introduction of any transitional arrangements take effect from January 01, 2018, BCBS proposes that the additional amendments to the Pillar 3 standard will come into effect from January 01, 2019.

     

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    Comment Due Date: May 04, 2018

    Effective Date: January 01, 2019 (Proposed)

    Keywords: International, Banking, Accounting, Basel III, Disclosures, ECL, IFRS 9, Pillar 3, BCBS

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