IFRS 9 transitional Regulation published

There has been concern about the anticipated regulatory capital impact when International Financial Reporting Standard 9 is implemented from January 2018, resulting from some firms seeing a significant increase in expected credit loss provisions.

In response, the EU Council has published the text of a Regulation that, amending the Capital Requirements Regulation, sets out a transitional measure that may mitigate the impact of IFRS 9 on regulatory capital for certain institutions for up to five years.

Anticipating the publication of this Regulation, the Bank of England wrote to firms in September to ask them to consider their preparation for IFRS 9 and whether they would be likely to need to rely upon this Regulation.  While the Regulation still needs to formally adopted by the Council the publication of the text should assist firms in their preparations.