Financial Instruments Recognition and Impairment for Banks under IFRS9
Short course
In London and Singapore (Singapore)
Learn how to account for financial instruments!
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Type
Short course
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Location
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Duration
1 Day
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Start date
Different dates available
The first half of this intensive one-day programme is devoted to gaining hands-on expertise on how financial assets and liabilities are recognized under IFRS 9. Each type of financial instrument is dissected by using a case study in which the accounting entries are covered in detail. The new requirements are contrasted with IAS 39 where relevant.
The second half of the programme covers impairments. Key elements of the three bucket model such as the calculation of expected credit losses and the significant increase in credit risk are covered in detail. Special emphasis is placed on the link between IFRS 9’s impairment model and the Basel III’s framework, specifically around probability of defaults and the treatment of expected credit losses.
What differentiates this programme from other seminars is its practical approach. Rather than just repeating the IFRS 9 guidance often seen at other seminars, we cover each financial instrument in detail, going through the accounting entries over their life cycle. Impairment is also thoroughly addressed in a practical way by providing insights into the IFRS 9 implementation at banks, linking it to Basel III to convey the challenges of using methodologies already in place, and highlighting the areas likely to be challenged by bank supervisors and internal audit.
Facilities
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About this course
- Learn how to account for financial instruments and calculate impairments
- Gain familiarity with how banks are approaching key judgements
- Analyse main areas likely to be challenged by bank supervisors and internal audit
- Gain understanding of the issues concerning IFRS 9 implementation
- Bank finance, internal audit and risk management professionals
- Bank treasurers
- Advisors at consultancy firms
- Structurers and salespeople at investment banks
- Bank supervisors
- Basic understanding of financial statements
- Basic understanding of financial instruments: bonds, loans, derivatives etc.
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Subjects
- Risk
- IAS
- IFRS
- Credit
- Financial
- IT risk
- Financial Training
- Derivatives
- Repos
- Probability
- Financial Risk
- Finance
- Finance Market
- Hybrid
- Hedge accounting
- Financial liabilities
- Credit Risk
- Credit losses
- Basel III
Teachers and trainers (1)
Juan Ramirez
Teacher
Juan Ramirez is a senior professional at one of the big 4 auditing firms with first-hand experience on providing accounting advice on specific complex financial instruments and transactions, primarily related to (de)recognition, consolidation and hedging. Previously, he was responsible for the marketing of strategic equity derivatives to corporate and banking clients at BNP Paribas in London. Juan is the author of “Accounting for Derivatives” and “Handbook of Corporate Derivatives and Equity Capital Markets” books, both published by Wiley.
Course programme
- Introduction to IFRS 9
- Interaction with other IFRS standards
- Financial assets classification under IFRS 9. Comparison to IAS 39
Case study: Recognition of a loan at amortized cost
Case study: Recognition of a debt instrument at fair value through OCI
Case study: Recognition of equity instruments
- Reverse repos. Treatment of collateral
- Financial assets denominated in foreign currency
- Special situations: liquid asset buffer challenges
- Reclassifications
Case study: Bank of America’s credit cards. Effects of changes in expected customer behaviour
Financial Liabilities and Off Balance Sheet Items Recognition- Financial liabilities classification under IFRS 9. Comparison to IAS 39
- Accounting for repos
- The fair value option. Recognition of own debt
- Accounting for financial guarantee contracts and loan commitments
- Accounting for derivatives. Adjustments to the valuation (CVA/DVA, FVA, etc.)
- Hybrid instruments
- Hedge accounting types and application requirements
- Micro vs. macro hedge accounting
- Application of fair value option vs. hedge accounting
- Credit risk hedging
- The three bucket model
Case study: Recognition of an impairment charge
Expected credit losses- 12-month expected credit losses. Initial recognition/presentation of assets
- Lifetime credit losses
- Time value of money
- Expected life vs. contractual period
- Collateral
- Undrawn commitments
- Exceptions: 12m PD as proxy for changes in lifetime credit losses, low credit risk, measurement for undrawn and drawn components of financial assets
- Asset recognition vs. banking/trading book
- Differences between regulatory and accounting PDs
- Expected credit losses and standardized/IRB approaches for credit risk
- Link with PD
- Individual vs. portfolio level. Grouping of individual items
- Missed payments vs. probability of default
- Write-offs
- Definition of “credit impaired”
- Initial and subsequent recognition. Credit-adjusted effective interest rate
- Modifications
- Application of the write-off criteria to impaired assets. Interpretation of “no reasonable expectation of recovering a financial asset”
- Offsetting of derivatives
- Offsetting of repos
- Netting in practice
Financial Instruments Recognition and Impairment for Banks under IFRS9