The members of the EACB welcome the opportunity to comment on the BCBS proposals on the regulatory treatment of accounting provisions and their transitional arrangements.
The revised treatment of credit losses in accounting standards will introduce fundamental changes in banks’ accounting practices, this will have regulatory effects that need to be assessed on both a quantitative and a qualitative basis. We would advise the Committee to undertake a comprehensive assessment to ensure the regulatory long-term approach appropriately takes into consideration accounting provisions.
From a conceptual perspective, the new standards has affects, albeit differently, the regulatory status of accounting provisions under standardized (SA) and IRB methods. The treatment of accounting provisions under both approaches needs to be addressed at the same time to ensure a level-playing-field.