Regulatory Alerts2021-02-02
Expected Credit Losses from Financial Instruments (Proper Conduct of Banking Business Directives 202, 203, 314, 329)
The Supervisor of Banks issued Circular C-06-2650 to amend Proper Conduct of Banking Business Directives 202, 203, 314, and 329 in alignment with the US CECL accounting rules for expected credit losses. The amendments cancel minimum allowance requirements for housing loans based on arrears depth and integrate troubled debt guidelines into Directive 314, while updating capital adequacy and risk assessment provisions in Directives 202, 203, and 329. These regulatory changes apply to all banking corporations starting January 1, 2022, to reflect updated supervisory needs regarding nonaccruing loans and collateral reliance.
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