This site uses cookies to provide you with a more responsive and personalised service. By using this site you agree to our use of cookies. Please read our cookie notice for more information on the cookies we use and how to delete or block them.
The full functionality of our site is not supported on your browser version, or you may have 'compatibility mode' selected. Please turn off compatibility mode, upgrade your browser to at least Internet Explorer 9, or try using another browser such as Google Chrome or Mozilla Firefox.

EBA consults on guidance on accounting for expected credit losses

  • Document (dk gray) Image

27 Jul 2016

The European Banking Authority (EBA) has launched a consultation on draft guidelines on credit institutions' credit risk management practices and accounting for expected credit losses.

The EBA draft guidelines build on the guidance by the Basel Committee on Banking Supervision (BCBS) in December 2015 on the same matter and feature a detailed section on the application of IFRS 9 Financial Instruments. The draft guidance notes:

The EBA welcomes the move from an incurred loss model to an ECL model under IFRS 9. IFRS 9 is, overall, an improvement compared to IAS 39 in the accounting for financial instruments and the changes on credit loss provisioning should contribute in addressing the G20’s concerns about the issue of ‘too little, too late’ recognition of credit losses and improve the accounting recognition of loan loss provisions by incorporating a broader range of credit information. IFRS 9 is therefore expected to address some prudential concerns and contribute to financial stability. However, the application of IFRS 9 also requires the use of judgement in the ECL assessment and measurement process which could potentially affect the consistent application of IFRS 9 across credit institutions and the comparability of credit institutions’ financial statements.

The EBA notes that the objective of the proposed guidelines is to be in line with the BCBS guidance. The EBA guidelines would also not prevent credit institutions from meeting the impairment requirements in IFRS 9.

Comments on the draft guidance are requested by 26 October 2016. The EBA aims to finalise the proposed guidelines during the fourth quarter of 2016 or first quarter of 2017, taking into account the comments received during the consultation. The guidelines should be implemented by 1 January 2018.

Please click for the following additional information on the EBA website:

Correction list for hyphenation

These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.