Stage fright: banks tackle IFRS 9 loan-loss volatility
Banks look to counter volatility of loss provisioning through careful calibration of loan buckets
When it comes to their capital ratios, dealers are no fans of volatility. A sudden downward shock could force them to rein in their balance sheets, freeze or dispose of certain business lines and scramble to raise replacement capital to stay above regulatory minimums.
When it comes into effect from 2018, International Financial Reporting Standard 9 (IFRS 9) threatens to unleash exactly the kind of unwelcome volatility dealers are desperate to avoid, forcing them to divert retained earnings from
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