On 6 January 2021, the European Securities and Markets Authority (ESMA) issued a public statement promoting transparency in the IFRS financial statements of banks regarding accounting for the third series of the European Central Bank’s targeted longer-term refinancing operations (TLTRO III).
The main recommendations for affected banks are to:
- Provide entity-specific disclosures of the significant accounting policies and of the significant judgements and assumptions related to the TLTRO III transactions.
- Ensure transparency about risks arising from financial instruments, addressing banks’ assessment of the possible achievement of conditions or covenants attached to the TLTRO III loans.
- Disclose the carrying amount of TLTRO III liabilities at the end of the reporting period and the related interest expense.