July 26, 2016
The European Banking Authority (EBA) launched today a consultation paper on draft Guidelines on credit institutions’ credit risk management practices and accounting for expected credit losses; it follows the publication of Guidance by the Basel Committee in December 2015 on the same matter. These Guidelines aim at ensuring sound credit risk management practices associated with the implementation and on-going application of the accounting for expected credit losses. The consultation will run until 26 October 2016.
The EBA has stated that high-quality and consistent application of the accounting standards is the basis for the effective and consistent application of the regulatory capital standards. The EBA welcomes the application of IFRS Standards which will eventually require the measurement of impairment loss provisions to be based on an expected credit loss accounting model rather than on an incurred loss accounting model. These guidelines should be read as the supervisory approach to support the appropriate application of those standards.
The consultation period ends on the 26th of October 2016. Comments to this consultation can be sent to the EBA by clicking on the “send your comments” button on the consultation page. A public hearing will take place at the EBA premises on 3 October 2016 from 2:30pm to 4:30pm UK time.
The consultation paper can be found on the EBA website here.
The original press release can be found on the EBA website here.