Featured Product

    European Council Adopts Creditor Hierarchy and IFRS 9 Rules for Banks

    December 07, 2017

    The European Council adopted two legislative acts on banking: the first is a directive on the ranking of unsecured debt instruments in insolvency proceedings (bank creditor hierarchy) and the second is a regulation on transitional arrangements to phase in the regulatory capital impact of the International Financial Reporting Standard (IFRS) 9. The draft regulation related to IFRS 9 also contains a phase-out of provisions on the large exposures treatment of public-sector debt denominated in non-domestic EU currencies. The Directive and Regulation shall enter into force on the day following that of their publication in the Official Journal of the European Union. The regulation on IFRS 9 transitional arrangements shall apply from January 01, 2018.

    The regulation on IFRS 9 and large exposures is intended to mitigate the potential negative regulatory capital impact of the introduction of IFRS 9 on banks. Use of IFRS 9 by banks may lead to a sudden increase in expected credit loss (ECL) provisions and a consequent sudden fall in their regulatory capital ratios. Transitional arrangements are needed from January 01, 2018, consistent with use of the new accounting standard. It was, therefore, decided to split and fast-track the entry into force of certain provisions from a broader November 2016 EC proposal amending regulation 575/2013 on bank capital requirements. The resulting draft regulation will allow banks to add back to their common equity tier 1 capital a portion of the increased ECL provisions as extra capital during a five-year transitional period. That added amount will progressively decrease to zero during the course of the transitional period. The draft regulation also provides for a three-year phase-out of an exemption from the large exposure limit for bank exposures to public-sector debt denominated in the currency of another member state.

     

    Related Link: Press Release

     

    Keywords: Europe, EU, Banking, Accounting, IFRS 9, Transitional Arrangements, Large Exposures, Creditor Hierarchy, European Council 

    Featured Experts
    Related Articles
    News

    ESMA Releases Enforcement Priorities for 2019 Annual Financial Reports

    ESMA published a statement on the priorities that European enforcers will consider when examining the 2019 annual financial reports of listed companies.

    October 22, 2019 WebPage Regulatory News
    News

    EC Consults on Alternative Standardized Approach for Market Risk

    EC is consulting on a delegated regulation amending the Capital Requirements Regulation (CRR) with regard to the alternative standardized approach for market risk.

    October 21, 2019 WebPage Regulatory News
    News

    CPMI Report Examines Impact of Global Stablecoins

    This report by the G7 Working Group on Stablecoins finds that stablecoins, regardless of size, have implications ranging from anti-money laundering efforts across jurisdictions to operational resilience (including for cyber security), consumer or investor and data protection, and tax compliance.

    October 18, 2019 WebPage Regulatory News
    News

    BoE Announces Date for Publication of Stress Test Results for Banks

    BoE announced its plans to publish results of the full UK annual stress tests on December 10, 2019.

    October 18, 2019 WebPage Regulatory News
    News

    US Agencies Request Comments on Use and Impact of CAMELS Ratings

    US Agencies (FDIC and FED) are seeking information and comments from interested parties regarding the consistency of ratings assigned by the agencies under the Uniform Financial Institutions Rating System (UFIRS).

    October 18, 2019 WebPage Regulatory News
    News

    PRA Consults on Approach to Supervising Liquidity and Funding Risks

    In consultation paper (CP27/19), PRA published a proposal (CP27/19) to update the supervisory statement SS24/15 on the PRA approach to supervising liquidity and funding risk.

    October 17, 2019 WebPage Regulatory News
    News

    US Agencies Consult on Policy Statement on Allowance for Credit Losses

    US Agencies (FDIC, FED, NCUA, and OCC) are consulting on the policy statement on allowances for credit losses and on the guidance on credit risk review systems.

    October 17, 2019 WebPage Regulatory News
    News

    FSI Paper Examines Use of Suptech Initiatives by Financial Authorities

    The Financial Stability Institute (FSI) of BIS published a paper that examines the suptech developments by analyzing suptech initiatives of 39 financial authorities globally.

    October 17, 2019 WebPage Regulatory News
    News

    US Agencies Publish Notice to Extend Form FFIEC 102 for Three Years

    US Agencies (FDIC, FED, and OCC) published a joint notice regarding extension of the market risk regulatory report for institutions subject to the market risk capital rule (FFIEC 102).

    October 17, 2019 WebPage Regulatory News
    News

    ECB Publishes Recommendations on Euro Risk-Free Rates Transition

    ECB published a report, by private sector working group on euro risk-free rates, which contains recommendations, from a risk management perspective, on the transition to new risk-free rates.

    October 17, 2019 WebPage Regulatory News
    RESULTS 1 - 10 OF 4006