Opinion of the European Banking Authority on transitional arrangements and credit risk adjustments due to the introduction of IFRS 9
06/04/2017 EBAOn 22 November 2016, International Financial Reporting Standard
9, Financial Instruments (IFRS 9), was adopted in the EU1 to
replace the previous accounting standard International Accounting
Standard 39, Financial Instruments: Recognition and Measurement
(IAS 39). The EBA welcomed this change, which marks a move from an
incurred loss model under IAS 39 to an expected credit losses (ECL)
model under IFRS 9, as well as the timely adoption of IFRS 9 in the
EU.2
On 30 September 2016, the European Parliament issued a resolution
for the adoption for IFRS 9,3 calling for an examination of the
possibility of introducing a phase-in regime for the impairment
requirements of IFRS 9 of either three years or such duration until
an adequate international solution is put in place, to avoid any
sudden unwarranted impact on institutions’ capital ratios and
lending. On 23 November 2016, the European Commission, as part of
its CRR II/CRD V proposals, made certain suggestions on
transitional arrangements to mitigate the effect of the
introduction of IFRS 9 on CET1 capital (CET1) resulting from the
impairment requirements of IFRS 9.4