EBA: small banks will be worst hit by IFRS 9
Standard approach banks disadvantaged by higher capital impact and implementation burden
New accounting requirements that require provisioning for expected losses on credit exposures will result in higher provisioning and profit-and-loss (P&L) volatility, along with a decrease in banks' capital ratios, particularly for smaller banks using less sophisticated credit risk modelling, according to a report from the European Banking Authority (EBA).
The new IFRS 9 accounting standards, requiring banks to provision against expected credit losses, are slated to replace the existing
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