The European Banking Authority (EBA) has published an opinion on transitional arrangements and credit risk adjustments to mitigate the effect of International Financial Reporting Standard 9 (IFRS 9) on prudential ratios. The EBA is supportive of progressive recognition of the initial impact of IFRS 9 from 1 January 2018 until 2021.
The EBA’s opinion focuses on the main elements that should be considered when designing the transitional arrangements. Among other things, the EBA believes that no neutralisation of the initial impact of IFRS 9 should be allowed during the phase-in regime, starting as of 1 January 2018 and supports a ‘static’ approach for amortising over 4 years the one-off impact of IFRS 9. Institutions, if they wish, may opt to recognise the full impact of IFRS 9 as of day one.