Regulatory Alerts2020-03-26
International Financial Reporting Standard IFRS 9 Application in Response to the Coronavirus Pandemic
The South African Prudential Authority issued this guidance to direct banks on applying International Financial Reporting Standard 9 during the coronavirus pandemic. The authority mandates that temporary payment holidays and government subsidies be evaluated individually to prevent automatic credit risk stage migrations, while requiring subsidies to adjust loss given default rather than probability of default. Banks must avoid procyclical macroeconomic assumptions and accurately model loan modifications to ensure consistent expected credit loss provisioning, stable capital requirements, and reliable risk reporting.
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