2016/0360B(COD)

Capital Requirements Regulation: transitional arrangements for mitigating the impact of the introduction of IFRS 9 on own funds and the large exposures treatment of certain public sector exposures denominated in non-domestic currencies of Member States

Procedure completed

2016/0360B(COD) Capital Requirements Regulation: transitional arrangements for mitigating the impact of the introduction of IFRS 9 on own funds and the large exposures treatment of certain public sector exposures denominated in non-domestic currencies of Member States
RoleCommitteeRapporteurShadows
Lead ECON SIMON Peter (S&D) KARAS Othmar (EPP), FOX Ashley (ECR), NAGTEGAAL Caroline (ALDE), CARTHY Matt (GUE/NGL), GIEGOLD Sven (Verts/ALE), VALLI Marco (EFD), ZANNI Marco (ENF)
Lead committee dossier: ECON/8/10002
Subjects
Links

Activites

  • 2017/12/27 Final act published in Official Journal
  • 2017/12/12 Final act signed
  • 2017/12/12 End of procedure in Parliament
  • #3583
  • 2017/12/08 Council Meeting
  • 2017/12/08 Act adopted by Council after Parliament's 1st reading
  • 2017/11/30 Results of vote in Parliament
    • Results of vote in Parliament
    • T8-0468/2017 summary
  • 2017/11/29 Debate in Parliament
  • 2017/11/21 Approval in committee of the text agreed at 1st reading interinstitutional negotiations
  • 2017/07/14 Committee report tabled for plenary, 1st reading/single reading
    • A8-0255/2017 summary
    • ECON ECON/8/10002 SIMON Peter S&D
  • 2017/07/11 Committee decision to open interinstitutional negotiations with report adopted in committee
  • 2017/07/11 Vote in committee, 1st reading/single reading
  • #3549
  • 2017/06/16 Council Meeting
  • 2017/05/31 Committee referral announced in Parliament, 1st reading/single reading
  • 2016/11/23 Legislative proposal published
    • COM(2016)0850 summary
    • DG {u'url': u'http://ec.europa.eu/info/departments/financial-stability-financial-services-and-capital-markets-union_en', u'title': u'Financial Stability, Financial Services and Capital Markets Union'}, DOMBROVSKIS Valdis

Documents

Votes

A8-0255/2017 - Peter Simon - Am 2

2017/11/30
Position Total ALDE ECR EFDD ENF GUE/NGL NI PPE S&D Verts/ALE correctional
For 495 59 54 2 16 0 4 193 163 4 0
Against 141 0 5 33 12 45 7 0 1 38 0
Abstain 10 0 0 1 4 0 4 0 1 0 0

History

(these mark the time of scraping, not the official date of the change)

2018-09-12
activities/7/docs added
  • url
    http://www.europarl.europa.eu/sides/getDoc.do?secondRef=TOC&language=EN&reference=20171129&type=CRE
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    Debate in Parliament
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    http://www.europarl.europa.eu/oeil/popups/sda.do?id=30107&l=en
    type
    Results of vote in Parliament
    title
    Results of vote in Parliament
  • url
    http://www.europarl.europa.eu/sides/getDoc.do?type=TA&language=EN&reference=P8-TA-2017-0468
    text
    • The European Parliament adopted by 495 votes to 41, with 10 abstentions, a legislative resolution on the proposal for a regulation of the European Parliament and of the Council amending Regulation (EU) No 575/2013 as regards the leverage ratio, the net stable funding ratio, requirements for own funds and eligible liabilities, counterparty credit risk, market risk, exposures to central counterparties, exposures to collective investment undertakings, large exposures, reporting and disclosure requirements and amending Regulation (EU) No 648/2012.

      The European Parliament’s position adopted at first reading following the ordinary legislative procedure concerns the amendments to Regulation (EU) No 575/2013 with regard to the transitional arrangements designed to mitigate the impact of the introduction of IFRS 9 on own funds and for the large exposure treatment of certain public sector debt of Member States denominated in other than domestic currencies of Member States.

      The proposed Regulation recalled that IFRS 9 was published by the International Accounting Standards Board in July 2014. Regulation 2016/2067 requires EU banks to use it in their financial statements for financial years starting on or after 1 January 2018.

      IFRS 9 is aimed at improving the loss provisioning of financial instruments by addressing concerns that arose during the financial crisis. It responds to the G20’s call for a more forward-looking model for the recognition of expected credit losses on financial assets.

      The application of IFRS 9 may lead to a sudden significant increase in expected credit loss provisions and consequently to a sudden decrease in institutions’ Common Equity Tier 1 capital.

      The proposed amendments to Regulation (EU) No 575/2013 are intended to introduce transitional arrangements, which will apply from 1 January 2018, with a view to mitigating the potential negative regulatory capital impact on banks of the introduction of International Financial Reporting Standard (IFRS) 9.

      A recital refers to the resolution of 6 October 2016 in which the European Parliament called for a progressive phase-in regime that would mitigate the impact of the new impairment model of IFRS 9.

      The resulting draft regulation will allow banks to add back to their ‘common equity tier 1’ capital a portion of the increased expected credit loss provisions as extra capital during a five-year transitional period. That added amount will progressively decrease to zero during the course of the transitional period.

      Institutions should decide whether to apply those transitional arrangements and inform the competent authority accordingly. During the transitional period, an institution should have the possibility to reverse once its initial decision, subject to the prior permission of the competent authority which should ensure that such decision is not motivated by considerations of regulatory arbitrage

      The draft Regulation also provides for the phasing-out over three years (from 1 January 2018) of an exemption from the large exposure limit available for exposures to certain public sector debt of Member States denominated in other than domestic currencies of Member States.

    type
    Decision by Parliament, 1st reading/single reading
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    T8-0468/2017
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Results of vote in Parliament
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2017-12-08
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Council Meeting
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2017-12-08
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EP/CSL
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Act adopted by Council after Parliament's 1st reading
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2017-12-12
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Final act signed
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2017-12-12
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EP
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End of procedure in Parliament
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date
2017-12-27
text
  • PURPOSE: establish transitional provisions to progressively incorporate the impact on own funds of the introduction of IFRS 9.

    LEGISLATIVE ACT : Regulation (EU) 2017/2395 of the European Parliament and of the Council amending Regulation (EU) No 575/2013 as regards transitional arrangements for mitigating the impact of the introduction of IFRS 9 on own funds and for the large exposures treatment of certain public sector exposures denominated in the domestic currency of any Member State.

    CONTENT: the amendments to Regulation (EU) No 575/2013 are intended to introduce transitional provisions, which will apply from 1 January 2018, with a view to mitigating any negative impact on Common Equity Tier 1 capital arising from expected credit loss accounting following the introduction of the IFRS 9 international accounting standard.

    Responding to the G20 call, the International Financial Reporting Standard (IFRS) 9 aims to improve financial reporting on financial instruments by addressing the concerns that emerged in this area during the financial crisis. Credit institutions and investment firms that use IFRS to prepare its financial statements will be required to apply IFRS 9 as of the starting opening date of its first financial year beginning on or after 1 January 2018.

    The application of IFRS 9 may lead to a sudden significant increase in expected credit loss provisions and consequently to a sudden decrease in institutions’ Common Equity Tier 1 capital.

    The amending Regulation will allow institutions to add to their Common Equity Tier 1 capital a portion of the increase in expected credit loss provisions as additional capital for a transitional period of five years to 31December 2022. The portion of expected credit loss provisions that can be included in Common Equity Tier 1 capital should decrease over time down to zero.

    Institutions that decide to apply the IFRS 9 transitional arrangements specified in the Regulation should publicly disclose their own funds, capital ratios and leverage ratios both with and without the application of those arrangements in order to enable the public to determine the impact of those arrangements.

    The Regulation also provides for the phasing-out over three years of provisions for the exemption from the large exposure limit available for exposures to certain public sector debt of Member States denominated in the domestic currency of any Member State. 

    ENTRY INTO FORCE: 28.12.2017.

    APPLICATION: from 1.1.2018.

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Final act published in Official Journal
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CSL
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Council Meeting
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http://eur-lex.europa.eu/smartapi/cgi/sga_doc?smartapi!celexplus!prod!CELEXnumdoc&lg=EN&numdoc=32017R2395
title
Regulation 2017/2395
procedure/stage_reached changed
Old
Awaiting Parliament 1st reading / single reading / budget 1st stage
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Procedure completed
2017-11-24
2017-11-10
2017-09-29
2017-09-20
2017-08-02
2017-07-16
2017-07-13
2017-07-04
2017-06-30
2017-06-29
2017-06-24
2017-06-21
2017-06-02

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