Banks mull dedicated IFRS 9 capital buffers

Volatility of loan-loss provisioning from new accounting standard demands additional own-funds protection, say banks

Bespoke buffers to offset the effect of IFRS 9 are moving closer for many banks

A growing number of dealers say they are planning to bolster regulatory own-funds buffers to compensate for the capital-sapping effect of higher loan-loss provisions mandated under incoming accounting standards.

International Financial Reporting Standard 9 (IFRS 9), which takes effect on January 1, 2018, will increase provisions by as much as 30% on today’s figures and slash banks’ Common Equity Tier 1 ratios by as much as 75 basis points, according to a study by the European Banking Authority.

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