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Reg rageMay 27 2020

Regulators ask banks to go easy on forward provisioning

The authorities are giving banks scope to take a softer line on forward provisioning accounting rules, in the hope of preserving capital and the economy. Nonetheless, a sharp rise in bad loans is almost inevitable.

by Justin Pugsley

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What is happening?

Regulators are asking banks not to be overzealous when provisioning for bad loans under the IFRS 9 accounting standard that came into force in 2018. The US equivalent is the Current Expected Credit Loss (CECL) standard, coming into force in 2020.

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