EBA publishes Opinion on transitional arrangements and credit risk adjustments due to the introduction of IFRS 9

March 06, 2017

The European Banking Authority (EBA) published today an Opinion on transitional arrangements and credit risk adjustments to mitigate the effect of the accounting standard IFRS 9 on prudential ratios. The EBA supports the progressive recognition of the initial impact of IFRS 9 from 1 January 2018 until 2021.

The EBA Opinion focuses on the main elements that should be considered when designing the transitional arrangements. In particular, the EBA is of the view that no neutralisation of the initial impact of IFRS 9 should be allowed during the phase-in regime, starting as of 1 January 2018 and supports a ‘static’ approach for amortising over 4 years the one-off impact of IFRS 9. Institutions, if they wish, may opt to recognise the full impact of IFRS 9 as of day one.

In addition, the EBA believes that all IFRS 9 provisions should be considered as specific credit risk adjustments in the context of the current EBA Regulatory Technical Standards (RTS) on credit risk adjustments – notwithstanding the fact that amendments or clarifications to the RTS may be needed in the future.

The original press release can be found on the EBA website here.

Related links: