CBUAE Provides Guidance on Application of IFRS 9 and TESS Facility
CBUAE issued guidance to financial institutions on the application of International Financial Reporting Standard (IFRS) 9, post a stakeholder consultation. The guidance is intended to ensure that credit losses resulting from the consequences of COVID-19 pandemic are appropriately calculated. IFRS 9 guidance proposes practical solutions to manage the impact of economic uncertainty on the estimation of expected credit losses, while remaining compliant with IFRS 9. The guidance also aims to ensure transparency and disclosures, contributing to strengthened financial stability in the UAE.
Additionally, CBUAE issued a notice that provides additional clarifications on deferral requests under the Targeted Economic Support Scheme (TESS) liquidity facility and aims to further facilitate implementation of the scheme, with the aim to encourage banks and finance companies to draw-down more from the TESS liquidity zero cost funding facility designated to be used by impacted private corporate customers, small and medium-size enterprises (SMEs), and individuals. Pursuant to the notice, all banks and finance companies are required to consider the specific circumstances of impacted borrowers to receive a deferral of repayment within the TESS, as options for granting deferrals include the following:
- Deferment of principal only, or
- Deferment of both interest/profits and principal repayment, or
- Deferment of interest/profits only
The notice highlighted that the most in-demand option will be for the deferment of both interest/profits and principal repayment, unless the circumstances of a borrower allow for accepting other options. CBUAE also welcomed initiatives taken by banks to support and relieve their impacted customers without drawing against the TESS program, which is available to them. In this notification, CBUAE has disclosed the list of banks that availed more than 50% of the allocated TESS liquidity facility, which aims to protect and support the impacted customers during such unprecedented times. To date, 77% has been drawn-down from the AED 50 billion liquidity facility within the Targeted Economic Support Scheme (TESS), equivalent to AED 38.5 billion of allocated funds.
Related Links
Keywords: Middle East and Africa, UAE, Banking, Credit Risk, ECL, IFRS 9, Liquidity Risk, TESS, COVID-19, CBUAE
Featured Experts

Metin Epözdemir
Metin Epözdemir helps European and African banks with design and implementation of credit risk, stress testing, capital management, and credit loss accounting solutions.

Masha Muzyka
CECL, IFRS 9, and IFRS 17 expert; credit risk and insurance risk specialist; strategic planning and credit analytics solutions consultant

Victor Calanog, Ph.D.
Leading economist; commercial real estate; performance forecasting, econometric infrastructure; data modeling; credit risk modeling; portfolio assessment; custom commercial real estate analysis; thought leader.
Related Articles
EBA Finalizes Remuneration Standards for Investment Firms in EU
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).
ECA Recommends Actions to Enhance Resolution Planning for Banks
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 Publishes Key Elements of the 2021 Stress Testing for Banks in UK
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 Proposes Rules on Identity Verification of Depositor Protection
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 Publishes Work Program for 2021
FSB published the work program for 2021, which reflects a strategic shift in priorities in the COVID-19 environment.
FCA Issues Update on Move to New Data Collection Platform
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 Publishes Derivation Rules for Reporting by Banks
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 Revises Capital Planning and Stress Testing Requirements for Banks
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.
ECB Releases Results of Bank Lending Survey for Fourth Quarter of 2020
ECB published results of the quarterly lending survey conducted on 143 banks in the euro area.
ESAs Publish Reporting Templates for Financial Conglomerates
ESAs published the final draft implementing technical standards on reporting of intra-group transactions and risk concentration of financial conglomerates subject to the supplementary supervision in EU.