The CBUAE issued a IFRS 9 guidance to help banks and financial companies

Image Source Wam The Cbuae Issued A Ifrs 9 Guidance To Help Banks And Financial Companies


On Sunday, the UAE Central Bank issued guidance for banks and financial companies on the application of International Financial Reporting Standard 9, IFRS 9, during the COVID-19 pandemic.

This guide has been released in collaboration with the Financial Services Authority, FSRA, Abu Dhabi Global Market, ADGM, and the Dubai Financial Services Authority, DFSA, Dubai International Financial Center, DIFC.

The government regulates and controls banks and financial companies that may have customers affected by the outbreak of coronavirus.

The CBUAE had already taken action early to provide assistance to banks and financial companies under the Targeted Economic Support Scheme, TESS, taking into account the economic disruptions caused by COVID-19, which entered into force on March 15, 2020.

The authorities support both federal and local initiatives aimed at providing support to borrowers who will use the government-sponsored debt relief programs now.

In addition to these measures, CBUAE, FSRA and DFSA believe that the flexibility built into IFRS 9 should be used to overcome the current crisis by banks and financial companies that are part of TESS.

To help these banks and financial companies, the authorities will publish specific recommendations regarding the calculation of expected credit loss, ECL, provisioning in accordance with IFRS 9.

The guidelines developed by the authorities provide banks and financial companies with practical solutions for managing current economic uncertainty on the ECL, while remaining compatible with IFRS 9 and promoting a coherent approach.

The main purpose of this guide is to ensure that financial statements are based on current risk assessments faced by banks and financial companies and the recognition that the decision-making process is related to the application of IFRS 9 will need to be adjusted in the current environment.

The joint guidance was issued by the authorities at the same time for regulated banks and financial companies targeting those involved in TESS. They urge these agencies to review the manual and contact their respective leaders for further clarification, if necessary.

 “As uncertainty reigns in the economy and financial markets around the world, the UAE government has taken significant measures to support economic stability and preserve liquidity. As an integral part of the UAE’s financial infrastructure, FSRA has issued this joint guide for banks and financial companies regarding the practical application of IFRS 9 to provide guidance for managing the financial impact of our firms in the face of ongoing economic turmoil. ”- Richard Teng, FSRA CEO in ADGM.

FSRA is committed to providing comprehensive support to government initiatives and continues to monitor the situation closely to help companies cope with crises.

WAM


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