Regulatory Alerts2020-04-15
Joint Guidance on the Treatment of IFRS 9 Expected Credit Loss
The Central Bank of the UAE, DFSA, and FSRA have issued interim guidance requiring banks and finance companies to apply flexible IFRS 9 Expected Credit Loss staging mechanisms during the COVID-19 crisis. Institutions must group clients receiving payment deferrals into two categories based on temporary versus long-term creditworthiness impacts, holding Group 1 in their current stage while permitting Stage 2 migration for significantly affected Group 2 clients. The regulators further mandate the use of judgmental overlays, critical model input adjustments, and comprehensive disclosures to reflect realized drawdowns and economic uncertainty without immediate macroeconomic scenario updates.
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