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

    EC Adopts Financial Reporting Changes Arising from Benchmark Reforms

    EC published Regulation 2021/25 that addresses amendments related to the financial reporting consequences of replacement of the existing interest rate benchmarks with alternative reference rates.

    January 14, 2021 WebPage Regulatory News
    News

    BIS Bulletin Examines Key Elements of Policy Response to Cyber Risk

    BIS published a bulletin, or a note, that examines the cyber threat landscape in the context of the pandemic and discusses policies to reduce risks to financial stability.

    January 14, 2021 WebPage Regulatory News
    News

    HMT Updates List of Post-Brexit Equivalence Decisions in UK

    HM Treasury, also known as HMT, has updated the table containing the list of the equivalence decisions that came into effect in UK at the end of the transition period of its withdrawal from EU.

    January 14, 2021 WebPage Regulatory News
    News

    EBA Issues Erratum for Technical Package on Reporting Framework 3.0

    EBA published an erratum for technical package on phase 1 of the reporting framework 3.0.

    January 14, 2021 WebPage Regulatory News
    News

    EBA Publishes Risk Dashboard for Third Quarter of 2020

    EBA published the quarterly risk dashboard, along with the results of the Risk Assessment Questionnaire survey among 60 banks and 15 market analysts.

    January 13, 2021 WebPage Regulatory News
    News

    ECB Finalizes Guide on Supervisory Approach to Bank Consolidation

    ECB published a guide that sets out the supervisory approach to consolidation in the banking sector.

    January 12, 2021 WebPage Regulatory News
    News

    SRB Chair Outlines Work Priorities for 2021

    The SRB Chair Elke König published an article setting out work priorities for 2021.

    January 11, 2021 WebPage Regulatory News
    News

    FDIC Selects Companies to Compete in Final Phase of Tech Sprint

    FDIC has selected 11 technology companies—including BearingPoint, Fed Reporter, Inc, and S&P Global Market Intelligence, LLC—for inclusion in the third and final phase of the rapid prototyping competition.

    January 11, 2021 WebPage Regulatory News
    News

    PRA Proposes Approach for Supervision of International Banks

    PRA proposed (in CP2/21) an approach to supervising the UK activities of PRA-authorized banks and designated investment firms that are either headquartered outside the UK or are part of a group based outside the UK.

    January 11, 2021 WebPage Regulatory News
    News

    BoE and FCA on Updated Priorities and Roadmap for LIBOR Transition

    BoE and FCA announced that the Working Group on Sterling Risk-Free Reference Rates has published an update to the priorities and roadmap for the final year of LIBOR transition to help businesses to finish planning the steps they will need to take in the coming months.

    January 11, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 6414