Regulatory Alerts2004-01-23
Banks Act Circular 21/2004: Provisions under Regulation 28 and Impairments under Accounting Standard AC 133
The Registrar of Banks issued this circular to clarify the treatment of regulatory credit provisions under Regulation 28 following the introduction of Accounting Standard AC 133. The directive requires banks to ensure that AC 133 specific impairments exceed regulatory specific provisions, and that total AC 133 impairments surpass total regulatory provisions. Any calculated shortfall must be immediately eliminated by raising additional specific impairments or establishing a pre-tax General Credit-Risk Reserve from distributable reserves, which the regulator classifies as secondary capital.
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