Regulatory Alerts2019-12-01 | 23988Added · Updated
Guideline for the Treatment of IFRS 9 ECLs for Regulatory Capital Reporting Purposes
Financial institutions must classify Estimated Credit Losses under IFRS 9 as general or specific provisions for regulatory capital reporting. Stage 1 ECLs are treated as general provisions, allowable in Tier 2 capital up to a 1.25% limit of credit risk-weighted assets, while Stage 2 and Stage 3 ECLs are treated as specific provisions and must be deducted from the credit risk exposure amount. This guideline establishes a three-year transitionary period for this classification, with compliance required for all submissions starting from March 2020.
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