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9

Mar, 2016

Stage Assessment – Devil is in the Detail

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In our second post ‘building blocks of Impairment Modeling’, we had highlighted that IFRS 9 uses a ‘three stage model’ for measurement of ECL, and one of the major challenges of implementing this model was tracking and determining whether there has been a significant increase in risk of a credit exposure since origination. This blog post delves into the intricacies related to the three stage model, and some nuances that need to be considered for a bank looking to implement IFRS 9.

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4

Mar, 2016

IFRS 9 IT Architecture

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As the race against time to comply with IFRS 9 guidelines begins, several software solutions are being bandied about as a quick fix solution for automating the entire impairment modelling process. While automating is definitely the way to go in initiatives such as these, the question remains as to whether the software architecture should be of a strategic integrated nature or one that is decoupled and modular.

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25

Feb, 2016

BCBS Guidelines Impact on ECL Framework

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On 18th December 2015, the Basel Committee for Banking Supervision (BCBS) published its final insights on sound credit risk and accounting practices associated with the implementation of Expected Credit Losses (ECL) accounting frameworks, replacing the earlier guidance issued in June 2006 on ‘Sound credit risk assessment and valuation for loans’. In this post, we will be highlighting and deliberating upon some of the key issues which have been discussed in the BCBS guidance note, and their impact on various banks:

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22

Feb, 2016

Building Blocks of Impairment Modeling

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As highlighted in our previous post, one of the key areas of focus pertaining to IFRS 9 principles is credit risk modeling, which is required for appropriate estimations of Expected Credit Loss (ECL). In this post we will discuss the key components of Impairment Modeling, which will call for significant attention of the Banks’ management to ensure a successful implementation.

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9

Feb, 2016

From IAS 39 to IFRS 9 – Financial Instruments

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On 24 July 2014, IASB issued the fourth and final version of its new accounting standard – IFRS 9 Financial Instruments, which replaces most of the rule-based standards of IAS 39 with principle based guidance. IFRS 9 is built on a logical, single classification and measurement approach for financial assets that reflects the business model in which they are managed and their cash flow characteristics. The fundamental shift from IAS 39 to IFRS 9 standards is “Incurred Loss Approach” to “Forward-looking Expected Loss Approach” for impairment assessment. In the past, […]

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