EBA · 2023_6849 Rejected question

Day One Profit calculations

Regulation
Regulation (EU) No 575/2013 (CRR)
Article
TBC
Topic
Accounting and auditing
Submitted by
Individual
Submitted
2023-07-22
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Question

Can the EBA advise please: 1) If the implementation of the IFRS standard should differentiate between observable and unobservable parts of DOP and only defer the latter? 2) If such treatment would be both more accurately reflect the IFRS standard?  3) If such treatment would be materially beneficial for the EBA institutions and how exactly?  4) If above yes, will it work with IFRS to implement it?

Background

1) As of latest data, there seem to be c. 275bn L3 instruments reported by the EBA. 2) Part of these L3 instruments are fully observable and part partially observable. 3) EBA confirms that the whole Day One Profits from L3 instruments are deferred regardless is they are fully or partially observable L3 instruments. 4) Part of these L3 DOP come from observable and part from unobservable cash flows. 5) IFRS has recently decided not to split the unity of account but this seems to refer to multiple concurrent bundled cash flows from multiple instruments, rather than cash flows from different sequential periods of a single instrument. Hence, it may not refer exactly to this question.
No answer published yet.

Original source: European Banking Authority, Q&A ID 2023_6849

This Q&A is published by European Banking Authority and is non-binding. It does not constitute legal advice. Updated weekly from official ESA sources.

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