COVID-19 REGULATORY AND BEST PRACTICE RELIEF MEASURES RELATED TO BASEL III, IV AND THE IFRS 9

BACKGROUND:

The International Financial Reporting Standard 9 (IFRS 9) was introduced as a result of the 2008 financial crisis to make accounting for loan losses more forward-looking and to give markets better information about where Banks may be exposed to risk. The COVID-19 crisis has resulted in an extensive array of Government-backed measures to support businesses and the encouragement of payment moratoriums and interest waivers.

 
Regulatory authorities worldwide in general and in the region specifically are keen not to see a drastic increase in expected credit losses (ECLs) or massive staging downgrades, as this would constrain the amount of capital Banks have which enables them to continue lending to further support the economy. The International Accounting Standards Board (IASB) published statements on how the principles in IFRS 9 may be used to best reflect the economic and practical realities of the crisis.

The Basel Committee on Banking Supervision (BCBS) published its measures to reflect the impact of COVID-19, which encompass considerations for IFRS 9 reporting, but also looks at how they could interact with regulatory capital. The so-called Basel IV has been delayed to 2023. On the other hand, LIBOR transition might also be subject to extension.

These measures support the provision of lending by Banks to the real economy and provide additional operational capacity for Banks and supervisors to respond to the immediate financial stability priorities.

Since we recognize that this crisis has significant implications on the business environment in the region, we kindly invite you to a Live Virtual Training that will discuss the main technical clarifications to highlight how Banks can reflect the risk-reducing effect of these measures when conducting business.

OBJECTIVES:

Upon completion of this workshop, participants will be able to:

• Understand all the aspects of the current and unfolding situation and impact on key sectors;
• Understand how long would a COVID-19-Induced Recession last;
• Understand the forms of post-COVID-19 recovery;
• Discuss measures introduced by regulators worldwide and in the region to ensure that the global banking system remains financially and operationally resilient;
• BCBS decision to defer the Basel III implementation;
• ECL accounting treatment;
• Transitional arrangements for the regulatory capital treatment of ECL accounting;
• Changes with respect to Global Systemically Important Banks.

WHO SHOULD ATTEND?

• Risk Management staff across the board
• Capital Management and Basel implementation staff
• IFRS implementation staff
• Portfolio Management staff
• Treasury and Capital Markets staff
• Financial Management and Financial Control staff
• Compliance staff
• Relationship Managers and Account Managers
• Internal Auditors and External Auditors
• On-site and off-site supervisors and regulatory authorities

MAIN TOPICS:

DAY 1:

• Economic impact of the COVID-19;
• Loans subject to government guarantees new treatment;
• Deferral of Basel III Implementation Dates;
• Treatment of modified debt;
• Use of reasonable and supportable forward-looking information;
• Treatment of payment holidays granted voluntarily due to regulatory or other policy encouragement.

DAY 2:

• Definition of the IFRS 9 significant increase in credit risk (SICR) during the pandemic;
• How to assess Credit Risk based on rescheduled payments;
• Impact of payment holidays or other relief measures on the forbearance status of the loans. The impact of other business support measures;
• Transitional measures relaxation;
• Transitional rules on impact of ECL provisions on CET 1 capital. (BCBS)
• Forecasting and multiple economic scenarios;
• Reporting and disclosure.