Publications

The International Accounting Standards Board (IASB) has published a new international standard for reporting financial instruments called IFRS9. The main aim of IFRS 9 is to increase the relevance of accounting provisions to transfer information from the organisation to investors and to the regulators about those events that can be reliably forecast. This will in turn reduce the noise from arbitrary effects as a result of errors and really making accounting provisions relevant, as far as possible, to investors. The new standard fundamentally alters earnings and the balance sheet that are reported on. With less than a year to final implementation date, most organisations should be preparing to conduct a parallel run with the respective reporting to follow. However, this is generally not the case and there are still many milestones to be reached prior to 1 Jan 2018. In this paper, we will outline how the Standard has evolved from IAS39, the changes that have been proposed and a detailed analysis in terms of technology, resource, modelling and data as well as the actions to be considered in adopting to IFRS9.

The current Financial Services arena is being disrupted by complex innovative technology changes. One such innovation is the new Payments Services Directive 2 (PSD2). Thanks to the implementation timeframes for PSD2, 2018 will be a game-changing year for the majority of players in the Financial Services industry. Many fear the scope and impact of the Directive, since it could potentially have a negative effect on revenues related to payment services as well as expose individual client account information to a wider audience of new entrants to the payments industry. FiSer Consulting understands the key challenges and impacts that the Directive will bring to the table. In order to address this, we have composed a Positioning Paper where we outline different topics regarding the Directive and how the services we provide can help financial institutions respond accordingly to the regulation.

On November 23rd 2016 the Commission presented a proposal regarding the further reformation of EU banks in terms of strengthening their joint vitality. The headlines of the proposition are of significant importance. The financial crisis shook banks and financial regulatory systems. In its devastating aftermath, banks and businesses try to regain stability and market confidence to benefit financial growth and employment opportunities. The proposal builds on the current ongoing post-crisis, setting out guidelines how banks can pick up where they left off to support the financial economy again. The paper further elaborates on how the banking situation can be reformed by implementing elements that endure future financial pitfalls and / or shocks. The document also pin points aspects of the to-adapt regulatory framework, and in what terms the framework will affect a banks’ complexity, size or business profile.The proposals include the following key elements: 1. Measurements to increase financial institutions’ stability and resilienceThis includes the following elements: Particular risk-sensitive capital requirements around the market risk area, counterparty credit risk and for liability of central counterparties (CCPs); Procedures, techniques and approaches that expose risk quicker and more precisely so that banks can adapt to them accordingly; A methodology called a binding Leverage Ratio (LR) to prevent financial institutions from redundant leverage; A methodology called a binding Net Stable Funding Ratio (NSFR) to approach the excessive reliance on short-term wholesale funding and to minimise and/or reduce long-term funding risk; A precondition for Global Systemically Important Institutions (G-SIIs) to keep the merest amount of capital levels and other equipment that bear losses in resolution. The precondition, known as ‘Total Loss-Absorbing Capacity’ (TLAC), will be incorporated with the existing MREL (Minimum Requirement for own funds and Eligible Liabilities) system. TLAC advantage lies in the fact that it is appropriate to use for all banks – meaning that it will increase and restore the failing G-SIIs, while securing financial stability and minimising risks for taxpayers at the same time. 2. Tools that improve the lending capacity of banks to help support the European economic growth.These tools would be applied to small businesses to minise potential disadvantages they could encounter throughout the reformative banking landscape: Diminish issues relating to the area of remuneration for non-complex and small financial institutions. Issues of this scope seem to be superfluous for these institutions; Increase bank’s capacities to lend to SMEs and enable them to fund future infrastructure ventures; Make sure CRD/CRR rules are more balanced and less troublesome for smaller financial businesses. 3. Assist in the progress of making the role of banks more apparent in achieving deeper and more liquid EU capital markets to support the establishment of a Capital Markets Union. These adjustments are supposed to benefit banks in: Bypassing uneven capital requirements for trading book positions which also include positions related to market-making activities; Decreasing holding costs for instruments such as high quality securitisation or sovereign debt instruments; Preventing restraints in relation to trades cleared by CPPs for Institutions that act as intermediaries for clients. The proposal and its suggested regulatory measurements have been submitted to the European Parliament and Council for consideration and possible adoption. The original press release can be found here.