EBF response to the BCBS Consultative document: Regulatory treatment of accounting... EBF response to the ECB Draft Guide on “fit and proper assessments”
BCBS Discussion Paper:
Regulatory treatment of accounting provisions
EBF advisor: Denisa Mularova
Publication date: 12 January 2017
- The regulatory framework must ensure that the same potential losses are not covered both by capital and provisions.
- Discussions on the treatment of excess provisioning should be accelerated. The revision of the treatment of accounting provisions cannot take place in blocks without considering all relevant major aspects altogether.
- Provisions in excess of 12 months should be considered for capital purposes regardless of the capital method used to calculate capital.
- Excesses and shortfalls in provisions should be treated symmetrically both under the standardized approach (STA) and internal ratings-based (IRB) approaches. If this symmetrical treatment is accepted, then the regulatory EL could be useful in providing a basis for such a symmetrical treatment for STA. However it needs further considerations and recalibrations to eliminate overlaps.