Guidelines on disclosure requirements on IFRS 9 transitional arrangements

Status: Under development

These guidelines aim to increase consistency and comparability of the information on own funds and capital and leverage ratios disclosed by institutions during the transition to the full implementation of the new accounting standard, and to ensure market discipline.

  • Consultation Paper
Consultation on Guidelines on disclosure requirements on IFRS 9 transitional arrangements (EBA-CP-2017-11)

Summary
13/07/2017

The European Banking Authority (EBA) launched today a consultation on a set of Guidelines specifying a uniform format for the institutions’ disclosure requirements of IFRS 9 and analogous expected credit losses (ECLs) transitional arrangements. The Guidelines aim at increasing consistency and comparability of the information disclosed by institutions during the transition to the full implementation of the new accounting standard, and at ensuring market discipline. The consultation runs until 13 September 2017.
 
On 31 May 2017, the European Commission adopted a proposal to amend the Capital Requirements Regulation (CRR) regarding the transitional period for mitigating the impact on own funds of the introduction of IFRS 9. The Proposal leaves banks two options: i) to phase-in the impact of the implementation of IFRS 9 and analogous ECLs, or ii) to recognise the full impact of IFRS 9 and analogous ECLs on capital and leverage ratios from 1 January 2018 or before the end of the transitional period. Where banks decide to phase-in the impact of the implementation of IFRS 9 and analogous ECLs, they will have to include in their Pillar 3 disclosures their capital and leverage ratios with and without the application of the transitional arrangements, so that users are able to determine the impact of the arrangements on those ratios. 
 
To ensure institutions’ Pillar 3 disclosures regarding capital and leverage ratios are consistent across the EU during the transitional period, it is crucial that a uniform format on the disclosure of these parameters is used. These draft Guidelines specify the uniform disclosure format institutions shall apply for this purpose also taking into account the developments at international level, namely the standards on Pillar 3 disclosure requirements, issued by the Basel Committee on Banking Supervision (BCBS) on March 29, 2017. 
 
In parallel, the EBA has published today a Report with some qualitative and quantitative observations of its second impact assessment of IFRS 9.

Consultation process

Comments to this consultation can be sent to the EBA by clicking on the "send your comments" button on the consultation page. All contributions received will be published following the close of the consultation, unless requested otherwise. Please note that the deadline for the submission of comments is 13 September 2017.
A public hearing will take place at the EBA premises on 7 September 2017 from 11.00am to 13.30pm UK time.

Legal basis

These Guidelines have been developed in accordance with of the new Article 473a, paragraph Eight, included in the Proposal for a Regulation of the European Parliament and of the Council amending Regulation (EU) No 575/2013 as regards the transitional period for mitigating the impact on own funds of the introduction of IFRS 9 and the large exposures treatment of certain public sector exposures denominated in non-domestic currencies of Member States (First reading) adopted by the EU on the 31 of May 2017. This new Article mandates the EBA to issue guidelines on IFRS 9 and analogous ECLs transitional arrangements disclosure requirements.