EBA Publishes Roadmap for IFRS 9 and Launches Benchmarking Exercise
EBA published the IFRS 9 roadmap, which provides a comprehensive overview of the planned monitoring activities on IFRS 9 implementation. EBA also launched an IFRS 9 benchmarking exercise on a sample of institutions, with the aim to analyze the modeling practices followed by institutions and how IFRS 9 implementation impacts the amount of expected credit losses (ECL) in terms of own funds and regulatory ratios.
EBA already conducted several exercises on the IFRS 9 impact on EU institutions and communicated preliminary observations on the first stages of implementation. In the roadmap, EBA clarifies its intention to continue to monitor and promote a consistent application of IFRS 9 and to work on the interaction with prudential requirements. The roadmap includes the different phases of this work from qualitative and quantitative perspectives and this work will take place in the coming months and years. While EBA has already communicated the rationale underpinning the qualitative monitoring, the purpose of this roadmap is to clarify further the next steps with regard to the quantitative monitoring. An important aspect of the quantitative monitoring is the use of selected indicators extracted from regulatory reporting.
Another major aspect of the quantitative monitoring is the benchmarking of the modeling techniques used by EU institutions for IFRS 9 purposes. The IFRS 9 benchmarking exercise represents an important step in the context of the ongoing quantitative monitoring activities. The focus of this exercise is to assess whether the use of different modeling techniques and inputs can lead to significant inconsistencies in terms of the ECL amount that directly impacts own funds and regulatory ratios. EBA will leverage on its experience and expertise on benchmarking of prudential models already gained by regulators and supervisors. During the first phase of the IFRS 9 benchmarking exercise, the objective is to collect information on modeling practices and to perform a first assessment on quantitative parameters to be reported by institutions. The sample of institutions is similar to the one used for the previous EBA reports on IFRS 9. EBA will continue to engage closely with all concerned stakeholders for the purpose of this exercise and more generally for the purpose of its monitoring work on IFRS 9 implementation.
Related Links
Keywords: Europe, EU, Banking, IFRS 9, Expected Credit Loss, ECL, Credit Risk, Roadmap, IFRS 9 Benchmarking, EBA
Featured Experts
Scott Dietz
Scott is a Director in the Regulatory and Accounting Solutions team responsible for providing accounting expertise across solutions, products, and services offered by Moody’s Analytics in the US. He has over 15 years of experience leading auditing, consulting and accounting policy initiatives for financial institutions.
Masha Muzyka
CECL, IFRS 9, and IFRS 17 expert; credit risk and insurance risk specialist; strategic planning and credit analytics solutions consultant
Anna Krayn
CECL adoption expert; engagement manager for loss estimation, internal risk capability enhancement, and counterparty credit risk management
Previous Article
US Agencies Extend Consultation Period for the Proposed SA-CCRRelated Articles
OSFI Issues Phase2 Consultation on Climate Scenario Exercise for Banks
The Office of the Superintendent of Financial Institutions (OSFI) recently announced a consultation on the second phase of the Standardized Climate Scenario Exercise (SCSE) for banks and other financial institutions it regulates in Canada.
BIS and Central Banks Experiment with GenAI to Assess Climate Risks
A recent report from the Bank for International Settlements (BIS) Innovation Hub details Project Gaia, a collaboration between the BIS Innovation Hub Eurosystem Center and certain central banks in Europe
Nearly 25% G-SIBs Commit to Adopting TNFD Nature-Related Disclosures
Nature-related risks are increasing in severity and frequency, affecting businesses, capital providers, financial systems, and economies.
Singapore to Mandate Climate Disclosures from FY2025
Singapore recently took a significant step toward turning climate ambition into action, with the introduction of mandatory climate-related disclosures for listed and large non-listed companies
SEC Finalizes Climate-Related Disclosures Rule
The U.S. Securities and Exchange Commission (SEC) has finalized the long-awaited rule that mandates climate-related disclosures for domestic and foreign publicly listed companies in the U.S.
EBA Proposes Standards Related to Standardized Credit Risk Approach
The European Banking Authority (EBA) has been taking significant steps toward implementing the Basel III framework and strengthening the regulatory framework for credit institutions in the EU
US Regulators Release Stress Test Scenarios for Banks
The U.S. regulators recently released baseline and severely adverse scenarios, along with other details, for stress testing the banks in 2024. The relevant U.S. banking regulators are the Federal Reserve Bank (FED), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC).
Asian Governments Aim for Interoperability in AI Governance Frameworks
The regulatory landscape for artificial intelligence (AI), including the generative kind, is evolving rapidly, with governments and regulators aiming to address the challenges and opportunities presented by this transformative technology.
EBA Proposes Operational Risk Standards Under Final Basel III Package
The European Union (EU) has been working on the final elements of Basel III standards, with endorsement of the Banking Package and the publication of the European Banking Authority (EBA) roadmap on Basel III implementation in December 2023.
EFRAG Proposes XBRL Taxonomy and Standard for Listed SMEs Under ESRS
The European Financial Reporting Advisory Group (EFRAG), which plays a crucial role in shaping corporate reporting standards in European Union (EU), is seeking comments, until May 21, 2024, on the Exposure Draft ESRS for listed SMEs.
