Embedding IFRS 9 into operating models and processes Led by: The - - PowerPoint PPT Presentation
Embedding IFRS 9 into operating models and processes Led by: The Center for Financial Professionals & Tim Neijs, Zanders Presenters: Louis Brown, Investec Simone La Fortezza, UniCredit Topics to discuss 1 First impacts on business
2 UniCredit S.p.A. – public
1 2 3
3 UniCredit S.p.A. – public
accounted by most of the players
results
affected
Some main impacts from IFRS9 affecting business
New Classification and Impairments rules not easy to understand, while sometimes requiring action by network Internal Training and Communication key to realize main drivers behind changes in LLP levels and P&L/Budget results Understanding new framework Need for business managers of closer relationship with some key stakeholders (Credit Department, Risk Management functions, Accounting support) Strengthening relationship Business-Credit functions New Impairment models put more emphasis on some risk related drivers that need to be taken more care of when assessing business feasibility and profitability, such as (e.g.):
Assessing business
1
4 UniCredit S.p.A. – public
2
Approval / Granting Credit Proposal Risk Classification and Action Plan Approval Risk Classification and Action Plan Proposal Risk Classification Proposal Action Plan Follow-up
RM MONITORER RM UW
deterioration requires credit Monitoring processes to evolve in
effective
deterioration before Stage allocation criteria are breached
manager and credit monitoring manager is key to timely address early warning signals
level needs to evolve in order to capture new drivers and manage volatility Credit monitoring process (Illustrative)
5 UniCredit S.p.A. – public
ILLUSTRATIVE
IFRS 9
prod. Perimeter certif. Controls and m.a. Meeting CRO - CFO LLP certification LLP data segmentation Lifetime parametres and staging LLP release to CFO
3
Workload
Increased number of activities and controls needed both on Risk and Accounting side, including additional calculations, elaboration of a bigger amount of data
Timing
Simply adding up new activities required to calculate LLPs under IFRS9 to the reporting process under IAS39, we could end up taking up to 50% more days to complete the process!
Interplay between risk and finance
CRO, CFO, GDO and IT to work together in order to streamline the process (vs Silos approach)
UniCredit S.p.A. – public
Confidential
New model Stakeholders
Lessons learned from the 1st implementation release of our IFRS 9 models
Reducing the avalanche of questions from the monthly reporting process!
Confidential
Who are our the new stakeholders and how did we get them comfortable with the new journey?
and provide sign-off
well as Stage movements
to improve model ownership and responsibility
committee
review monthly Expected Credit Loss movements
exercises annually
limitations where identified
Confidential
In computer programming, an application programming interface (API) is a set of subroutine definitions, communication protocols, and tools for building software. In general terms, it is a set of clearly defined methods of communication among various components. A good API makes it easier to develop a computer program by providing all the building blocks, which are then put together by the programmer.
Embedded models into Application Programming Interface (APIs)
Pros
Cons
Pros
Cons
Pros
Cons
Confidential
control.
calculations.
input changes.
The team received 250 emails the first day the ECL calculation was switched on….
Embedding IFRS 9 into internal processes to move towards a BAU environment