At your risk, Middle East banks. IFRS9 challenges

7 September 2014 - Deloitte has just released its Fourth Annual Global International Financial Reporting Standards IFRS Banking Survey that highlights the challenges and consequences of increased provisioning for regulatory capital by banks approaching the implementation of IFRS 9 Financial Instruments. The Deloitte survey was conducted over a critical period in the development of IFRS 9 and provides insights into current thinking across the sector.

This year’s Deloitte survey sample covers 54 banks from  Europe, Middle East, Africa, Asia Pacific and the Americas. Key findings from the report include:

• Banks will require 3 years to implement IFRS 9, so will come under pressure with a 2018 effective date
• 56% of banks surveyed feel that pricing will be affected by accounting change
• 70% of banks surveyed expect their IFRS 9 expected loss to be higher than current regulatory expected loss

“Timing of enforcement of IFRS 9 as originally set to take effect on January 1, 2018 with possibility of early implementation, is the biggest challenge given the final standard has just been released,” said Joe El Fadl, Financial Services Industry leader at Deloitte Middle East. “Other implementation challenges are coordinating finance, credit, IT and other teams and resource constraints affecting the financial reporting team as well as the availability and readiness of support from risk and the application of the expected loss model for measurement of impairment.”

The Deloitte annual banking survey reported additional challenges in implementing of IFRS 9. The banks surveyed cited uncertainty around regulatory, tax and U.S. reporting requirements, making it difficult to determine the scope of the project. Internally, systems development and reconciliation was also seen as particular challenges.

To view the whole report, go to: http://bit.ly/1rPHAhO

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Deloitte provides audit, tax, consulting, and financial advisory services to public and private clients spanning multiple industries. With a globally connected network of member firms in more than 150 countries and territories, Deloitte brings world-class capabilities and high-quality service to clients, delivering the insights they need to address their most complex business challenges. Deloitte’s more than 200,000 professionals are committed to becoming the standard of excellence.

About Deloitte & Touche (M.E.)

Deloitte & Touche (M.E.) is a member firm of Deloitte Touche Tohmatsu Limited (DTTL) and is the first Arab professional services firm established in the Middle East region with uninterrupted presence since 1926.

Deloitte is among the region’s leading professional services firms, providing audit, tax, consulting, and financial advisory services through 26 offices in 15 countries with more than 3,000 partners, directors and staff. It is a Tier 1 Tax advisor in the GCC region since 2010 (according to the International Tax Review World Tax Rankings). It has received numerous awards in the last few years which include Best Employer in the Middle East, best consulting firm, and the Middle East Training & Development Excellence Award by the Institute of Chartered Accountants in England and Wales (ICAEW).