Featured Product

    EBA and ESMA Clarify Accounting Implications of COVID-19 Measures

    EBA and ESMA issued statements to address certain accounting implications of the economic support and relief measures adopted by EU member states in response to the COVID-19 crisis. The statement by ESMA covers measures, such as moratoria on repayment of loans, that have an impact on the calculation of expected credit losses in accordance with IFRS 9. EBA extended comment period for the ongoing consultations and clarified a number of interpretative aspects on the functioning of the prudential framework in relation to the classification of loans in default, the identification of forborne exposures, and their accounting treatment.

    ESMA provides guidance to issuers and auditors on the application of IFRS 9 (the Financial Instruments standard), specifically regarding the calculation of expected credit losses and related disclosure requirements. While the statement addresses solely financial reporting aspects, ESMA has coordinated with EBA, which issued a statement on the prudential framework in light of COVID-19 measures from March 25, 2020. Both statements are consistent regarding financial reporting. Furthermore, before publishing this statement, ESMA actively engaged with the services of EC to coordinate the response in this area. ESMA explains that, for further information on the audit of financial statements in the context of COVID-19, entities can refer to the CEAOB statement from March 25, 2020. EBA also highlighted that when applying the IFRS 9 international accounting standard, institutions are expected to use a certain degree of judgment and distinguish between borrowers whose credit standing would not be significantly affected by the current situation in the long term and those who would be unlikely to restore their creditworthiness. 

    In its statement, EBA also reminds financial institutions about their consumer protection obligations, temporarily lifts some reporting obligations for payment service providers, and calls on payment service providers to raise their contactless payment thresholds to the legal limit. As a follow-up to its decision to support banks’ focus on key operations and to limit any non-essential requests in the short term, EBA reviewed all ongoing activities requiring inputs from banks in the next months and decided to:

    • Extend the deadlines of ongoing public consultations by two months
    • Postpone all public hearings already scheduled to a later date and run them remotely via teleconference or similar means
    • Extend the remittance date for funding plans data
    • Extend the remittance date for the Quantitative Impact Study (QIS) based on December 2019 data, in coordination with BCBS

    The following are the ongoing consultations whose deadline EBA has extended by two months:

    • Discussion Paper on the future changes to the EU-wide stress test (extended to June 30, 2020)
    • Consultation paper to update the identification methodology of global systemically important institutions (August 05, 2020)
    • Draft Guidelines on the appropriate subsets of sectoral exposures to which competent or designated authorities may apply a systemic risk buffer in accordance with Article 133 (5)(f) of Directive 2013/36/EU (July 13, 2020)
    • Draft Guidelines under Articles 17 and 18(4) of EU Directive 2015/849 on customer due diligence and money laundering/terrorist financing risk factors (July 06, 2020)
    • Consultation paper on draft regulatory technical standards on the treatment of non-trading book positions subject to foreign-exchange risk or commodity risk (June 10, 2020)

     

    Related Links

    Keywords: Europe, EU, Banking, Securities, COVID 19, IFRS 9, Expected Credit Loss, SICR, Financial Instruments, Stress Testing, Systemic Risk, ESMA, EBA

    Featured Experts
    Related Articles
    News

    BCBS Amends Guidelines on Sound Management of AML/CFT Risks

    BCBS amended the guidelines on sound management of risks related to money laundering and financing of terrorism (ML/FT).

    July 02, 2020 WebPage Regulatory News
    News

    EBA Guidelines on Treatment of Structural Foreign Exchange Under CRR

    EBA finalized the guidelines on treatment of structural foreign-exchange (FX) positions under Article 352(2) of the Capital Requirements Regulation (CRR).

    July 01, 2020 WebPage Regulatory News
    News

    FSB Issues Statement on Impact of COVID-19 Crisis on Benchmark Reform

    FSB published a statement on the impact of COVID-19 pandemic on global benchmark transition.

    July 01, 2020 WebPage Regulatory News
    News

    IAIS Publishes List of Internationally Active Insurance Groups

    IAIS published the list of Internationally Active Insurance Groups (IAIGs) publicly disclosed by group-wide supervisors.

    July 01, 2020 WebPage Regulatory News
    News

    FED Temporarily Revises FR Y-9C With Respect to PPPLF and CARES Act

    FED has temporarily revised the reporting form on consolidated financial statements for holding companies (FR Y-9C; OMB No. 7100-0128).

    July 01, 2020 WebPage Regulatory News
    News

    EC Launches Consultation on Review of Solvency II Directive

    EC launched a consultation on the review of the key elements of Solvency II Directive, with the comment period ending on October 21, 2020.

    July 01, 2020 WebPage Regulatory News
    News

    ECB Consults on Supervisory Approach to Consolidation in Banking

    ECB launched a consultation on the guide that sets out supervisory approach to consolidation projects in the banking sector.

    July 01, 2020 WebPage Regulatory News
    News

    PRA Letter Sets Expectations on Approach to Managing Climate Risks

    PRA published a letter that builds on the expectations set out in the supervisory statement (SS3/19) on enhancing banks' and insurers' approaches to managing the financial risks from climate change.

    July 01, 2020 WebPage Regulatory News
    News

    US Agencies Finalize Amendments to Swap Margin Rule

    US Agencies (Farm Credit Administration, FDIC, FED, FHFA, and OCC) finalized changes to the swap margin rule to facilitate implementation of prudent risk management strategies at banks and other entities with significant swap activities.

    July 01, 2020 WebPage Regulatory News
    News

    IAIS on Package for 2020 Data Collection on ICS and Aggregation Method

    IAIS published technical specifications, questionnaires, and templates for 2020 Insurance Capital Standard (ICS) and Aggregation Method data collections.

    June 30, 2020 WebPage Regulatory News
    RESULTS 1 - 10 OF 5425