Are you ready for IFRS9?

In 2014 the IASB published a significant change to the standard in the form of IFRS9, replacing IAS39 guidelines. What trigged this, the 2008 financial crisis. A number of financial institutions globally were found to have delayed recognition of credit losses on loans, identifying a weakness in the old standard and forcing change.

Impairment recognition was all based on trigger events, now you must make provision for current exposure and expected lifetime losses in your portfolio(s). The new standard has brought with it lots of debate, not least how the new standard will interact with the Basel III accord and Capital levels. Also what is lifetime for each product? Fixed term loans, credit cards, mortgages, overdrafts and the many new and innovative offerings coming from across the industry all need to be modelled through to ensure that adequate provisions are made but also that your business remains competitive verses another institutions interpretation.

The new IFRS9 standard will considerably increase the workload across various functional groups, especially in Finance and Risk.

Athena Consultancy brings an experience and expertise in the impairment modelling of unsecured and secured retail portfolios, which can be tailored to the organization requirements. Using our experience, gained over numerous years of forecasting expected credit losses and dealing with regulatory change, we can help institutions to accelerate the implementation of IFRS 9 before the mandatory effective date of 1st January 2018.

FREE download of white paper

Download white paper

The task and challenges and how Athena can help

General Understanding
of IFRS 9

  • Providing a training session on the implications of the new proposed standards (vs. Current IAS 39)

Gap Assessment

  • Gap analysis on Data, Methodology and Disclosure requirements

Mapping Existing Processes

  • Preparing an inventory of all risk models available for the new standard
  • Preparing the essential modifications to be made to the Basel 2 models in order to meet the new standard (TTC vs. PD for PD, lifetime vs. 12 months PD, neutralization of conservatism margins)

Development of Methodology and Models

  • Development and Validation of methodology and models covering the following:
    • Transition Criteria (from Stage 1 to Stage 2)
    • Lifetime Expected Losses
    • Forward Looking

Policies / Controls / Monitoring / Governance

  • Formulation of policies, controls, monitoring and governance process for the new standard

IT Requirements / Dry Run

  • Identifying the IT requirements for the implementation
  • Implementing the models for parallel run

Reporting and Disclosures
    • Identifying modifications to entity data collection and reporting processes for local and group reporting
    • Redefining the key reporting practices and controls to accommodate the new impairment projections
    • Desigining the end-user solution for reporting purpose, management information, audits and regulatory requirements

    Timescales

    The timescales have been set out in terms of the standard implementation, Athena can help you manage through and meet these milestones:

    Phase 1 – Evaluation 2014 to 2015

    • Planning
    • Costing
    • Governance
    • Business Model Study
    • Stakeholder Management
    • Gap Analysis – Data and Existing Models
    • Type of Models and Data Requirement

    Phase 2 – Development 2015 to 2016

    • Data Architecture Study
    • Model Devleopment, Validation and Sign-off
    • Policy Review and Sign-off
    • IT Engagement and Strategy Defined

    Phase 3 – Implementation 2016 to 2017

    • Reporting and Disclosures Requirements
    • Control/Monitoring/Governance Framework
    • System Testing and Implementation
    • IFRS go-live

    Phase 4 – Dry Run 2017 to 2018

    • Dry Run for Generating Comparatives
    • Testing Provisions, Controls and Disclosures
    • External Investor Awareness
    • IFRS 9 Effective Date

    We have practitioners in the methodology, creating the correct data sets needed and building all the supporting models now. If you are interested in our services we would be very pleased to meet with you and discuss any aspect of the IFRS9, you can contact us, me Chris Kneen on +44 7807 817322 and ckneen@athenacmrs.com, alternatively Mark Murton (mmurton@athenacmrsconsultancy.com) or Rahul Choudhary (rchoudhary@athenacmrsanalytics.com)

    Don’t forget your free download

    Download white paper