Question ID
2018_3927
Legal act
Regulation (EU) No 575/2013 (CRR)
Topic
Accounting and auditing
Article
473a
Paragraph
4
COM Delegated or Implementing Acts/RTS/ITS/GLs/Recommendations
Not applicable
Article/Paragraph
n.a.
Type of submitter
Competent authority
Subject matter
IFRS 9 Transitional arrangements - Calculation of the amount of CET add-back in accordance to Article 473a – paragraph 4
Question

How should the amount referred to in Article 473a(4) be calculated:

a) The difference between the Expected Credit Losses (ECL) at reporting date for loans that are not credit impaired and the ECL at implementation date for all the loans that are not credit impaired at the implementation date, or;

b) The ECL at reporting date for loans that are not credit impaired minus the ECL at implementation date for those same loans?

Background on the question

The second part of the value to be added to CET1 according to Article 473a(4), should be the value of expected credit loss for loans that are not credit impaired at reporting date minus the value of expected loss for loans that are not credit impaired at the transition date.

Two possible interpretations as described in the question above are therefore put forward for calculating this difference.

Submission date
Final publishing date
Final answer

The amounts referred to in Article 473a(3)(a) and (b) of CRR are total amounts of expected credit losses, i.e. no exposure-by-exposure assessment shall be performed.

The total amounts of Stage 1 and Stage 2 Expected Credit Losses (ECL) at the reporting date, i.e. for all exposures not credit impaired at the reporting date, and the total amounts of Stage 1 and Stage 2 ECL on 1 January 2020 or on at the date of initial application of IFRS 9, whichever is later, i.e. for all exposures not credit impaired on 1 January 2020 or on at the date of initial application, shall be relevant for the calculation, whichever is later. From these total amounts, where Article 468 CRR applies, expected credit losses determined for exposures measured at fair value through other comprehensive income should be excluded.

Status
Final Q&A
Answer prepared by
Answer prepared by the EBA.
Note to Q&A

Update 26.03.2021: This Q&A has not yet been reviewed by the EBA in the light of the changes introduced to Regulation (EU) No 575/2013 (CRR).

Update 28.10.2021: This Q&A has been amended in light of the change(s) in Article 473a to Regulation (EU) No 575/2013 (CRR), applicable from 27.06.2020.

Disclaimer

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