IFRS 9 poses credit risk model dilemma for Asian banks
New accounting standard requires tough data upgrade, but capital incentives are weakening
The direction of travel at the Basel Committee in recent years has been to reduce the capital incentives for banks to invest in internal models, but new accounting standards are pushing in the opposite way. In Asia, the problem is whether the historical data and internal infrastructure are sufficient to allow banks to derive maximum benefit from implementing the new International Financial Reporting Standard 9 (IFRS 9) for measuring the value of financial assets.
National Australia Bank (NAB)
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