Banks in the Middle East will require three years to implement IFRS 9 (International Financial Reporting Standards) , and will come under pressure with a 2018 effective date, according to a new report.

The challenges and consequences of increased provisioning for regulatory capital by banks approaching the implementation of IFRS 9 Financial Instruments are highlighted in the fourth annual Global International Financial Reporting Standards IFRS Banking Survey released by Deloitte, a provider of audit, tax, consulting, and financial advisory services.

This year’s Deloitte survey, which was conducted over a critical period in the development of IFRS 9, samples 54 banks from Europe, Middle East, Africa, Asia Pacific and the Americas.

Fifty-six per cent of banks surveyed feel that pricing will be affected by accounting change, added the Deloitte survey.

Seventy per cent of banks surveyed expect their IFRS 9 expected loss to be higher than current regulatory expected loss, the report noted.

“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 US reporting requirements, making it difficult to determine the scope of the project, Deloitte said.

Internally, systems development and reconciliation was also seen as particular challenges, it added. – TradeArabia News Service