Review of EBA IFRS 9 findings and forthcoming second impact assessment

Overview:

The EBA IFRS 9 first impact assessment study on a sample of European banks has found that 75% of banks anticipate an 18% increase in their P&L provisioning. Tier I capital ratios are also expected to decrease on average by 59bps. Drawing on the initial findings from the EBA IFRS 9 first impact assessment study, the article includes an overview of the main objectives and tasks facing credit institutions under the new IFRS 9 asset impairment framework. It reflects on the challenges with the implementation of new principle-based accounting standards, including financial assets classification, allocation of staging, application of internal risk models and main differences with the Basel IRB framework.

What will you learn :

  • Key highlights from the EBA IFRS 9 first impact assessment study and expectations for the second one
  • Challenges to the implementation of the new Expected Credit Losses (ECL) impairment framework
  • Main differences between Basel IRB credit models and IFRS 9