Second Global IFRS Banking Survey – Q1 2012
Global banks react to developing accounting reform
Over the past few years significant effort has gone into the development of an entirely new financial instrument accounting standard. As we approach the finalization of the standard that will replace IAS 39 within the International Financial Reporting Standards (IFRS), a picture is emerging of the final body of rules that will come into force over the coming years.
In light of this, the Global Financial Services Industry practice has conducted a second Global IFRS Banking survey. Deloitte has gathered responses from 56 global banking groups, including responses from 19 of the 29 global systemically important financial institutions (G-SIFIs) determined by the Financial Stability Board. Key survey findings include:
- Contributors are much more confident that the industry can meet the requirements of IFRS 9 but are not persuaded that IFRS 9 will provide more useful information.
- Many aspects of implementation remain of concern. One major concern was tracking the credit quality of loans from origination or purchase, especially at a loan level as this is likely to be operationally complex and system intensive.
- Impairment provision uplift resulting from the proposed rules is expected to be most significant for corporate and SME loans.
- Half the respondents expect the new rules to affect pricing with an even greater proportion predicting an increase in capital requirements.
This survey aims to raise awareness of the size and scale of the impact of the proposed changes and to help banking clients better understand the impact of the proposed rules.