Regulatory Alerts2017-01-23
Clarifications on the Prudential Treatment of Unrealized Profits and Losses from Exposures to Central Governments in the Available-for-Sale Portfolio
The Bank of Italy clarifies the prudential treatment of unrealized profits and losses on central government exposures in the Available-for-Sale portfolio following the implementation of ECB Regulation 2016/445 and IFRS 9. Significant banks supervised directly by the ECB must gradually include or deduct these items from CET1 capital starting in October 2016, while less significant banks, SIMs, and other financial intermediaries may continue to fully sterilize them until IFRS 9 is effectively applied. The Bank of Italy will formally seek confirmation from European authorities that the removal of the sterilization filter coincides with the actual application date of the new accounting standard rather than its entry into force.
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