Featured Product

    ECB Publishes Thematic Report Assessing IFRS 9 Implementation by Banks

    November 24, 2017

    ECB published a thematic report that assesses the preparedness of institutions for implementation of IFRS 9. The report also outlines key supervisory expectations for the ongoing implementation and application of IFRS 9. The supervisory expectations considered in this thematic review are consistent with the international best practices and supervisory guidance issued by BCBS and EBA. IFRS 9 replaces IAS 39 and enters into force on January 01, 2018.

    This report presents the first quantitative and qualitative results of the thematic review on IFRS 9 for significant institutions (Sis) and less significant institutions (LSIs) within the Single Supervisory Mechanism, or SSM, framework. The scope of this supervisory exercise encompasses 106 SIs that prepare their financial statements in accordance with IFRS at the highest level of consolidation and are directly supervised by ECB. Additionally, the thematic review for LSIs was performed on a sample of 77 institutions in close collaboration between ECB Banking Supervision and the national competent authorities. This thematic review is a further step toward the consistent implementation of the IFRS 9 standard across banks in the euro area.

    Overall, the review concludes that, for some institutions, there is still room for improvement if a high-quality implementation of IFRS 9 is to be achieved. Supervisors have noted that the largest SIs are more advanced in their preparation than the smaller SIs. The aspect considered to be the most challenging is impairment measurement, which requires significant changes to the institutions’ internal processes and systems. However, institutions also encountered challenges with the classification and measurement of financial instruments. In many cases there is still room for aligning the accounting definitions with the regulatory definitions. Furthermore, institutions are still in the process of incorporating the EBA guidelines on ECL into their policies and procedures. Results of the thematic review were considered in the Supervisory Review and Evaluation Process (SREP) 2017. Based on information reported by banks under direct ECB supervision that were better prepared in the first quarter of 2017 to implement IFRS 9 (and thus provided the most reliable data), the fully loaded average negative impact on the regulatory common equity tier 1 (CET1) ratio is estimated to be 40 basis points. From the data reported by the LSIs that were better prepared in the first quarter of 2017, the fully loaded average negative impact on the regulatory CET1 ratio is estimated to be 59 basis points. 

     

    Related Links

    Keywords: Europe, EU, Banking, IFRS 9, SI, LSI, SSM, SREP, ECB

    Featured Experts
    Related Articles
    News

    EBA Publishes Phase 2 of Technical Package on Reporting Framework 2.10

    EBA published phase 2 of the technical package on the reporting framework 2.10, providing the technical tools and specifications for implementation of EBA reporting requirements.

    July 10, 2020 WebPage Regulatory News
    News

    FASB Proposes to Delay Implementation of Insurance Contracts Standard

    FASB issued a proposed Accounting Standards Update that would grant insurance companies, adversely affected by the COVID-19 pandemic, an additional year to implement the Accounting Standards Update No. 2018-12 on targeted improvements to accounting for long-duration insurance contracts, or LDTI (Topic 944).

    July 09, 2020 WebPage Regulatory News
    News

    APRA Updates Regulatory Approach to Loan Deferrals Amid COVID Crisis

    APRA updated the regulatory approach for loans subject to repayment deferrals amid the COVID-19 crisis.

    July 09, 2020 WebPage Regulatory News
    News

    BCBS and FSB Set Out Recommendations for Benchmark Transition

    BCBS and FSB published a report on supervisory issues associated with benchmark transition.

    July 09, 2020 WebPage Regulatory News
    News

    IAIS Sets Out Recommendations for Benchmark Transition for Insurers

    IAIS published a report on supervisory issues associated with benchmark transition from an insurance perspective.

    July 09, 2020 WebPage Regulatory News
    News

    ESMA Updates Reporting Manual on European Single Electronic Format

    ESMA updated the reporting manual on the European Single Electronic Format (ESEF).

    July 09, 2020 WebPage Regulatory News
    News

    EBA Calls on Resolution Authorities to Consider Impact of COVID Crisis

    EBA published a statement on resolution planning in light of the COVID-19 pandemic.

    July 09, 2020 WebPage Regulatory News
    News

    BCBS Finalizes Revisions to Credit Valuation Adjustment Risk Framework

    BCBS Finalizes Revisions to Credit Valuation Adjustment Risk Framework

    July 08, 2020 WebPage Regulatory News
    News

    ECB Guideline on Materiality Threshold for Credit Obligations Past Due

    ECB published a guideline (2020/97), in the Official Journal of European Union, on the definition of materiality threshold for credit obligations past due for less significant institutions.

    July 08, 2020 WebPage Regulatory News
    News

    FED Temporarily Revises FR Y-14 With Respect to PPP and CARES Act

    FED temporarily revised the capital assessments and stress testing reports (FR Y-14A/Q/M) to implement the changes in response to the COVID-19 pandemic.

    July 08, 2020 WebPage Regulatory News
    RESULTS 1 - 10 OF 5458