Featured Product

    EBA Assesses Post-Implementation Impact of IFRS 9 on EU Institutions

    December 20, 2018

    EBA published the initial observations on the post-implementation impact of IFRS 9 on banks in EU. This exercise, which builds on the two pre-implementation impact assessments published in November 2016 and July 2017, is mainly based on data extracted from supervisory reporting by institutions. The initial observations from this exercise are consistent with the forecasts of the second EBA impact assessment report.

    The report on IFRS 9 implementation is intended to provide preliminary observations on the first stages of implementation of IFRS 9 while a deeper analysis is still ongoing. Based on the data collected for the sample of banks, the actual negative day-one impact on common equity tier 1, or CET 1, capital (51 bps on simple average compared to 42 bps in the second impact assessment report from July 2017) and increase in provisions (9% on simple average compared to 13% in the second assessment report from July 2017) broadly confirm the previous estimations from the banks. In relation to the use of transitional arrangements mitigating the impact of IFRS 9 on CET 1 capital, the average CET 1 impact resulting from the add-back of provisions for all the banks in the sample applying these transitional arrangements corresponds to 118 bps. The main observations from the report highlight some areas where the EBA thinks further scrutiny is necessary. These include better understanding the drivers for the observed impact on CET 1, the quantitative and qualitative criteria used for transfers between stages, and the use of IFRS 9 transitional arrangements. 

    EBA notes that the post-implementation review of IFRS 9 is just starting and the effective impact of the standard, closely linked to the current and expected macroeconomic circumstances, as well as its implementation, will need to be reviewed through time. Therefore, EBA has developed a set of indicators using the supervisory reporting data that it intends to monitor on an ongoing basis. EBA will carry out further work on IFRS 9 modeling aspects to better understand the practices followed by banks and to assess which aspects might merit further investigation. Greater attention may be given to banks under the standardized approach, given their lack of modeling experience. As a medium/long-term action, EBA will consider the possibility of conducting a benchmarking exercise, whose objective would be to understand to what extent the use of different methodologies, models, inputs, and scenarios could lead to material inconsistencies in the expected credit loss outcomes between banks. In addition, EBA will continue to closely monitor and follow up on the ongoing work, at the level of BCBS, on the interaction between accounting expected credit loss models and regulatory provisions.

     

    Related Links

    Keywords: Europe, EU, Accounting, Banking, IFRS 9, Expected Credit Loss, CET 1, Credit Risk, EBA

    Featured Experts
    Related Articles
    News

    OSFI Issues Results of Pilot on Climate Risk Scenario Analysis

    The Office of the Superintendent of Financial Institutions (OSFI) published an update on the discussion paper that intended to engage federally regulated financial institutions and other interested stakeholders in a dialog with OSFI, to proactively enhance and align assurance expectations over key regulatory returns.

    January 20, 2022 WebPage Regulatory News
    News

    EC Issues Regulation on Adjustments to K-Factor Coefficients Under IFR

    The European Commission (EC) published a report summarizing responses to the targeted consultation on the supervisory convergence and the single rulebook in the European Union (EU).

    January 20, 2022 WebPage Regulatory News
    News

    ECB Issues Opinions on Green Bonds Standard and CRR Proposals

    The European Central Bank (ECB) published its opinion on a proposal for a regulation on European green bonds, following a request from the European Parliament.

    January 19, 2022 WebPage Regulatory News
    News

    ESRB Explores Policy Response to Risks Arising from Digitalization

    The Advisory Scientific Committee (ASC) of the European Systemic Risk Board (ESRB) published a report that explores the expected impact of digitalization on provision of financial and banking services, and proposes policy measures to address the risks stemming from digitalization.

    January 18, 2022 WebPage Regulatory News
    News

    HKMA Consults on FIRO Code, Revises Policy on Foreign Exchange Risk

    The Hong Kong Monetary Authority (HKMA) is consulting on the draft Financial Institutions (Resolution) Ordinance (Cap. 628), or FIRO, Code of Practice chapter on liquidity and funding in resolution, until March 14, 2022.

    January 18, 2022 WebPage Regulatory News
    News

    FI Publishes Multiple Regulatory and Reporting Updates

    The Swedish Financial Supervisory Authority (FI) announced that the capital adequacy reporting as at December 31, 2021 must be done by February 11, 2022.

    January 17, 2022 WebPage Regulatory News
    News

    EU Authorities Address COVID-19 Reporting, MCD, and PSD2 Issues

    The European Banking Authority (EBA) announced that the guidelines on the reporting and disclosure of exposures subject to measures COVID-relief measures shall continue to apply until further notice.

    January 17, 2022 WebPage Regulatory News
    News

    BSP Tackles Aspects of Lending and Islamic, Open & Sustainable Finance

    The Central Bank of the Philippines (BSP) issued communications covering developments related to online lending platforms, open finance framework and roadmap, and on the expected regulations in the area sustainable finance.

    January 16, 2022 WebPage Regulatory News
    News

    US Agencies Issue Regulatory Updates, FDIC Launches Tech Sprint

    The Board of Governors of the Federal Reserve System (FED) published the final rule that amends Regulation I to reduce the quarterly reporting burden for member banks by automating the application process for adjusting their subscriptions to the Federal Reserve Bank capital stock, except in the context of mergers.

    January 13, 2022 WebPage Regulatory News
    News

    EBA Issues Guide on Bank Resolvability, Consults on Transferability

    The European Banking Authority (EBA) published its assessment of risks through the quarterly Risk Dashboard and the results of the Autumn edition of the Risk Assessment Questionnaire (RAQ).

    January 13, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 7881