One small phrase is causing big headaches for banks subject to new accounting standards for credit loss provisioning: “reasonable and supportable”. The phrase refers to the information banks rely on when developing forecasts to determine whether loans on their books have suffered a material increase in credit risk between reporting periods.
For banks, a lot will turn on their definition of those words. It will directly affect the amount of loan loss reserves they need to set aside under IFRS 9
The week on Risk.net, March 10-16 2018Receive this by email