Featured Product

    EBA and ESMA Clarify Accounting Implications of COVID-19 Measures

    EBA and ESMA issued statements to address certain accounting implications of the economic support and relief measures adopted by EU member states in response to the COVID-19 crisis. The statement by ESMA covers measures, such as moratoria on repayment of loans, that have an impact on the calculation of expected credit losses in accordance with IFRS 9. EBA extended comment period for the ongoing consultations and clarified a number of interpretative aspects on the functioning of the prudential framework in relation to the classification of loans in default, the identification of forborne exposures, and their accounting treatment.

    ESMA provides guidance to issuers and auditors on the application of IFRS 9 (the Financial Instruments standard), specifically regarding the calculation of expected credit losses and related disclosure requirements. While the statement addresses solely financial reporting aspects, ESMA has coordinated with EBA, which issued a statement on the prudential framework in light of COVID-19 measures from March 25, 2020. Both statements are consistent regarding financial reporting. Furthermore, before publishing this statement, ESMA actively engaged with the services of EC to coordinate the response in this area. ESMA explains that, for further information on the audit of financial statements in the context of COVID-19, entities can refer to the CEAOB statement from March 25, 2020. EBA also highlighted that when applying the IFRS 9 international accounting standard, institutions are expected to use a certain degree of judgment and distinguish between borrowers whose credit standing would not be significantly affected by the current situation in the long term and those who would be unlikely to restore their creditworthiness. 

    In its statement, EBA also reminds financial institutions about their consumer protection obligations, temporarily lifts some reporting obligations for payment service providers, and calls on payment service providers to raise their contactless payment thresholds to the legal limit. As a follow-up to its decision to support banks’ focus on key operations and to limit any non-essential requests in the short term, EBA reviewed all ongoing activities requiring inputs from banks in the next months and decided to:

    • Extend the deadlines of ongoing public consultations by two months
    • Postpone all public hearings already scheduled to a later date and run them remotely via teleconference or similar means
    • Extend the remittance date for funding plans data
    • Extend the remittance date for the Quantitative Impact Study (QIS) based on December 2019 data, in coordination with BCBS

    The following are the ongoing consultations whose deadline EBA has extended by two months:

    • Discussion Paper on the future changes to the EU-wide stress test (extended to June 30, 2020)
    • Consultation paper to update the identification methodology of global systemically important institutions (August 05, 2020)
    • Draft Guidelines on the appropriate subsets of sectoral exposures to which competent or designated authorities may apply a systemic risk buffer in accordance with Article 133 (5)(f) of Directive 2013/36/EU (July 13, 2020)
    • Draft Guidelines under Articles 17 and 18(4) of EU Directive 2015/849 on customer due diligence and money laundering/terrorist financing risk factors (July 06, 2020)
    • Consultation paper on draft regulatory technical standards on the treatment of non-trading book positions subject to foreign-exchange risk or commodity risk (June 10, 2020)

     

    Related Links

    Keywords: Europe, EU, Banking, Securities, COVID 19, IFRS 9, Expected Credit Loss, SICR, Financial Instruments, Stress Testing, Systemic Risk, ESMA, EBA

    Featured Experts
    Related Articles
    News

    BoE Seeks Information Before Migrating Statistical Reporting to BEEDS

    The Bank of England (BoE) published the Statistical Notice 2021/09 requiring additional information from firms and software vendors to assist in the onboarding and testing phases for migrating statistical reporting to the BEEDS portal.

    October 25, 2021 WebPage Regulatory News
    News

    FCA Publishes Final Rules on Investment Firms Prudential Regime

    The Financial Conduct Authority (FCA) published the final rules on the Investment Firms Prudential Regime (IFPR) to streamline and simplify the prudential requirements for solo-regulated UK firms authorized under the Markets in Financial Instruments Directive (MiFID).

    October 25, 2021 WebPage Regulatory News
    News

    CFRF Publishes Guides to Manage Financial Risks from Climate Change

    The working groups of the Climate Financial Risk Forum (CFRF) published a second round of guides (or Session 2 guides), written by the industry for the industry, to help financial firms manage climate-related financial risks.

    October 21, 2021 WebPage Regulatory News
    News

    PRA Finalizes Policy for Non-Performing Exposure Securitizations

    The Prudential Regulation Authority (PRA) published the final Policy Statement PS24/21 that contains the new Non-Performing Exposures Securitization Part of the PRA Rulebook and an updated Supervisory Statement SS10/18 on the general requirements and capital framework with respect to securitizations.

    October 21, 2021 WebPage Regulatory News
    News

    EBA Updates Filing Rules for Supervisory Reporting

    The European Banking Authority (EBA) published version 5.1 of the filing rules for supervisory reporting.

    October 19, 2021 WebPage Regulatory News
    News

    ECB Amends Guideline on Procedures for Collection of AnaCredit Data

    The European Central Bank (ECB) Guideline 2021/1829 on the procedures for the collection of granular credit and credit risk data has been published in the Official Journal of European Union.

    October 19, 2021 WebPage Regulatory News
    News

    ECB Amends Guideline on Procedures for Collection of AnaCredit Data

    The European Central Bank (ECB) Guideline 2021/1829 on the procedures for the collection of granular credit and credit risk data has been published in the Official Journal of European Union.

    October 19, 2021 WebPage Regulatory News
    News

    EBA Publishes Standards on Disclosure of Investment Policy Under IFR

    The European Banking Authority (EBA) published the final draft regulatory technical standards on disclosure of investment policy by investment firms, under the Investment Firms Regulation (IFR).

    October 19, 2021 WebPage Regulatory News
    News

    EU to Explore Potential of Establishing a Joint Cyber Unit

    The European Council adopted conclusions inviting the European Union (EU) and the member states to further develop the cybersecurity crisis management framework.

    October 19, 2021 WebPage Regulatory News
    News

    EC Sets Out Work Program for 2022

    The European Commission (EC) adopted the work program for 2022.

    October 19, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 7598