U.S. Agencies (FDIC, FED, and OCC) issued a joint proposal to address changes to the U.S. generally accepted accounting principles (GAAP) described in the Accounting Standards Update on Financial Instruments—Credit Losses (ASU 2016-13); the proposal covers implementation, by banking organizations, of the current expected credit losses (CECL) methodology. Comments on the proposal will be accepted by July 13, 2018.
The proposal would revise the U.S. agencies’ regulatory capital rules to identify which credit loss allowances under the new accounting standard are eligible for inclusion in regulatory capital and to provide banking organizations the option to phase in the day-one adverse effects on regulatory capital that may result from the adoption of the new accounting standard. The proposal would also amend certain regulatory disclosure requirements to reflect applicable changes to the U.S. GAAP covered under ASU 2016-13. In addition, the U.S. agencies are proposing to amend their stress testing regulations to ensure that covered banking organizations that have adopted ASU 2016-13 would not include the effect of ASU 2016-13 on their provisioning for the purpose of stress testing until the 2020 stress test cycle. Finally, the U.S. agencies proposed to make conforming amendments to their other regulations that reference credit loss allowances.
Comment Due Date: July 13, 2018
Keywords: Americas, US, Banking, Accounting, CECL, ASU 2016-13, Proportionality, Stress Testing, US Agencies
Previous ArticleYves Mersch of ECB Speaks About Regulating Virtual Currencies
ECB finalized the guide on assessment methodology for the internal model method for calculating exposure to counterparty credit risk (CCR) and the advanced method for own funds requirements for credit valuation adjustment (A-CVA) risk.
EBA published an Opinion addressed to EC to raise awareness about the opportunity to clarify certain issues related to the definition of credit institution in the upcoming review of the Capital Requirements Directive and Regulation (CRD and CRR).
APRA is consulting on updates to ARS 210.0, the reporting standard that sets out requirements for provision of information on liquidity and funding of an authorized deposit-taking institution.
FED released hypothetical scenarios for a second round of stress tests for banks.
PRA published updates in relation to the 2021 Supervisory Benchmarking Portfolio exercise.
FED adopted a proposal to extend for three years, with revision, the capital assessments and stress testing reports (FR Y-14A/Q/M; OMB No. 7100-0341).
HKMA revised the Supervisory Policy Manual module CR-G-14 on margin and other risk mitigation standards for non-centrally cleared over-the-counter (OTC) derivatives transactions.
EBA issued a revised list of validation rules with respect to the implementing technical standards on supervisory reporting.
EBA published its response to the call for advice of EC on ways to strengthen the EU legal framework on anti-money laundering and countering the financing of terrorism (AML/CFT).
NGFS published a paper on the overview of environmental risk analysis by financial institutions and an occasional paper on the case studies on environmental risk analysis methodologies.