23 July 2019
The European Banking Authority (EBA) published today its IFRS 9 roadmap providing a comprehensive overview of planned monitoring activities on IFRS 9 implementation. The EBA also launched an IFRS 9 benchmarking exercise on a sample of institutions aimed at analysing the different modelling practices followed by institutions and how IFRS 9 implementation impacts the amount of expected credit losses in terms of own funds and regulatory ratios.
The 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, the EBA clarifies its intention to continue monitoring and promoting a consistent application of IFRS 9 as well as working on the interaction with prudential requirements. The roadmap includes the different phases of this work from qualitative and quantitative perspectives which will take place in the coming months and years.
The IFRS 9 benchmarking exercise represents an important step in the context of the on-going quantitative monitoring activities. The focus of this exercise is to assess whether the use of different modelling techniques and inputs can lead to significant inconsistencies in terms of expected credit losses (ECL) amount that directly impacts own funds and regulatory ratios. The 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 modelling 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.
The EBA already organised interactions with professional associations and representative banks as well as with external auditors on the benchmarking exercise. The 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 IFRS9 implementation.