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IFRS 9 has now gone live, but is still a big talking point, why is IFRS 9 such an important topic for those in credit risk in the banking industry?

Implementing IFRS 9 was a big issue. In particular, the technical part for the impairment calculations has been a challenge. There haven’t been software solutions in place, which already had been tested and were successfully producing numbers for years. All the software providers were working out new packages. They presented the IFRS 9 solutions as updates to the existing IFRS regime to evolve the impression of small adaptions. But IFRS 9 is completely different to IAS 39 and the changes are huge.
The delivery of those updates weren’t always on time and the planned parallel calculation runs were very short or sometimes couldn’t take place at all. As a consequence, all the relevant departments (accounting, risk management, controlling, the board of Directors) were not used to the numbers not speaking of the monthly changes. Those monthly changes are one of the main changes to the way impairments had to be built before (under IAS 39). Therefore the management is facing now the need to handle this new regime.

What lessons have risk teams learnt having implemented the IFRS 9 and what are the biggest challenges in the aftermath of implementation?

During the project, risk teams had to cooperate a lot with the accounting department which was completely new for them. This definitely enriched the focus of mainly the academic and quantitative working strategic risk managers. Risk management is normally split into an operative and strategic division. Life of the operative risk management will change a lot. Under local GAAP, they had to build general impairments and provisions to the best of one’s’ knowledge and belief. Now, the standard is forcing them to follow many quantitative rules which are not easy to fulfil adequately. Qualitative educated colleagues have to design scenarios and assign probabilities to them. This procedure is all new.
As the standard has gone live, the biggest challenges are the real monthly changes. If special triggers are hit, the impairment needs to be tripled. Under local GAAP, the operative risk manager could explain why the particular customers’ economic outlook changed, so that the need for the increase is justified. Since 1st January 2018, a strategic risk quant has to explain what parameter changed and what caused that increase. These new calculation specifications are difficult to understand in every detail and consequence. They, in addition, make the impairments fluctuate much more than they did in the past. This will take some time to find a solution and process to be confident with it.

What are the most important objectives banks are trying to achieve in the next 6-12 months in credit risk?

I see seven big objectives for 2018:
1.Get used to the fluctuations of the total impairments
2.Implement a useful process for the new standard requirements
3.Produce a meaningful provision story for the balance sheet 2018
4.Stabilize the tools launched in 2017 for the IFRS 9 regime
5.Finalize all the needed changes which have been allocated to phase two
6.Adapt the consecutive areas to the new changes like regulatory reporting, capital planning, MBO setting, etc.
7.Try to replace the workaround solutions and quick fixes

What would you like to achieve by attending the 6th Edition Credit Risk Modelling and Management under IFRS9 Conference?

I hope to gather insights of the status quo of other institutes. There are many questions I would like to receive answers to. If I could at least get some of the below answered, then this would be a successful conference:
- How did they handle their implementation issues and what solutions did they use?
- What did other banks experience as the biggest difficulties during 2017?
- Concerning the institutions expectations, did they turn out to be well addressed or did experts have to adapt their assumptions?
- Who supported the project externally? I assume the big four played a major role in the implementations across Europe.
- How will the calculations, estimations, and models develop in the following years?
- By now regulations and IFRS 9 standards are independent. However, how independent are they in reality and to what extent will that change?
- Where do in-house experts expect the IFRS journey will go?

Ahead of the 6th Edition Credit Risk Modelling and Management under IFRS9 Conference , we spoke with Oliver Fiala, Head of Risk Analysis at Volksbank Wien about the importance of IFRS 9 topic for those in credit risk in the banking industry.

To view the Conference Agenda, click HERE!

About the Conference:

This marcus evans conference will enable you to overcome the immediate post-implementation issues of IFRS9. You will learn how to best validate models and key strategies to effectively source and manage the data for IFRS9 calculation.  Furthermore, you will hear more about what is expected from the regulators and the auditors, and how their feedback can be incorporated to existing models. Finally, you will hear from industry experts how to move forward post-implementation to incorporate IFRS9 into business as usual processes.

The 6th Edition Credit Risk Modelling and Management under IFRS9 Conference will take place from the 25th to 27th of June 2018 in London, UK. 

To view the Conference Agenda, click HERE!

Copyright © 2018 Marcus Evans. All rights reserved.

About the speaker:

Oliver Fiala is working in the field of riskmanagement since 2000, for different banks and different positions. Besides the lead of the Group Credit Risk department and the ongoing mentoring of many new colleagues, he had to lead several project. Among others they are: developing a Credit Risk Portfolio Model, implementing IFRS 9, Credit Risk Reporting, RWA Management, Economic Credit Capital Calculation, Credit Risk Stresstesting and calculating Credit Risk Premia.
During his mathematic studies he started his professional life at Bank Austria followed by Erste Bank, where he was responsible for various quantitative topics from Default- und Loss Risk to Portfolio Credit Risk. Since 2005 he headed an international Basel II project team for parameter estimation.

Why is IFRS 9 such an important topic for those in credit risk in the banking industry

An interview with Oliver Fiala, Head of Risk Analysis, Volksbank Wien

Oliver Fiala, Head of Risk Analysis, Volksbank Wien

Speakers Include: 
  • Bank Pocztowy
  • Citi
  • Erste Group
  • FBN Bank
  • Magyar Nemzeti Bank
  • Nomura
  • Permanent TSB
  • UBS
  • UniCredit
  • Volksbank Wien

Previous Attendees Include:
  • AlphaBank 
  • Barclays
  • BBVA
  • BNP Paribas
  • Credit Suisse
  • DanskeBank
  • HSBC
  • ING
  • Landsbankinn
  • MetroBank

For more information, please contact: Yiota Andreou

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