New accounting rules pose threat to banks amid virus outbreak

IFRS 9 requires banks to take earlier provisions for loans going bad, especially when they cross key thresholds such as a “material change in circumstances”.

Meanwhile, US banks have been operating under a new standard, dubbed ‘current expected credit losses’, since the start of the year. This requires them to book lifetime loan losses as soon as there is reason to believe a loan will not be repaid in full.

FT 17 March 2020