Single Rulebook Q&A

Question ID: 2018_3927
Legal act : Regulation (EU) No 575/2013 (CRR) as amended
Topic : Accounting and auditing
Article: 473a
Paragraph: 4
Subparagraph:
Article/Paragraph : Not applicable
COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
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.

Date of submission: 23/05/2018
Published as Final Q&A: 25/05/2018
EBA 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 at the date of initial application of IFRS 9, i.e. for all exposures not credit impaired at the date of initial application, shall be relevant for the calculation.

Status: Final Q&A
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