Communications - Application of transitional provisions on IFRS 9 to financial intermediaries under Article 106 TUB

Communications - Application of transitional provisions on IFRS 9 to financial intermediaries under Article 106 TUB.

On 22 November 2016, the European Commission adopted IFRS 9 through Regulation (EU) 2016/2067. Pursuant to the Regulation, banks and other intermediaries that, under Italian law (1), use IAS/IFRS accounting standards to prepare their (individual and consolidated) financial statements are required to apply IFRS 9 starting from the financial year closed or ongoing as of 31 December 2018.

To make the impact of the new accounting standard on operators more gradual and to avoid that its application could determine sudden effects on their ability to meet prudential requirements, a specific transitional regime (2) was introduced in Regulation (EU) No 575/2013 (Capital Requirements Regulation – CRR) for banks and investment firms.

This regime allows – for the purpose of calculating prudential ratios – to distribute over a five-year period (from 2018 to 2022) the impact on own funds resulting from the application of the new IFRS 9 accounting standard.

Considering that financial intermediaries registered in the register referred to in Article 106 TUB are subject to a prudential regime analogous to that of banks, and, like them, are required to apply the new accounting standard starting from the financial year closed or ongoing as of 31.12.2018, it is deemed appropriate to extend to these subjects the possibility of availing themselves of the transitional regime introduced in the CRR.

The present regulatory intervention is not accompanied by a regulatory impact analysis as it does not entail appreciable additional costs for the recipients of the norms (3) and follows a simplified consultation (4).

Therefore, with this measure, the application of Article 473-bis of the CRR as introduced by Regulation (EU) 2017/2395 is ordered for financial intermediaries registered in the register referred to in Article 106 of the TUB.

Financial intermediaries and group parent companies of financial groups – whether they intend to avail themselves or not of the transitional regime – shall notify the Bank of Italy within 30 days from the publication of the present measure on the Bank of Italy website. The notification, in which the calculation method intended to be used by the intermediary is also indicated (5), must be sent to the Bank of Italy structure competent for the exercise of supervision over the intermediary.

For financial intermediaries belonging to banking groups or otherwise included within the scope of consolidated supervision pursuant to the CRR, the application of CRR rules at the consolidated level remains in force. Financial intermediaries belonging to banking or financial groups are nevertheless required to communicate their choice, which must be agreed upon with the parent company.

1 Article 2, paragraph 1, letter c), of Legislative Decree No. 38/2005 provides for the application of international accounting standards, inter alia, to banks; group parent companies of banking groups; SIM; SGR; financial intermediaries under Article 106 TUB; Imel; payment institutions. 2 See Article 473-bis as introduced by Regulation (EU) No 2017/2395. 3 Pursuant to Article 3 of the Measure of 24 March 2010 of the Bank of Italy. 4 As permitted by Article 4, paragraphs 2 and 4, of the Measure of 24 March 2010 of the Bank of Italy, the draft measure was submitted, for comments, to the main industry associations concerned. 5 See Article 473-bis, paragraph 9, paragraph 2.

This regulatory modification integrates Circular No. 288 and will be incorporated into the same at the first available opportunity.