KBRA Releases Research – Coronavirus (COVID-19): Why CECL Should Not Be Delayed

Only banks that adopt CECL are entitled to shield regulatory capital for the initial impact of adoption through a phase-in option that was finalized last year.

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Provider: 
Business Wire, Inc.Business Wire, Inc.
Retrieved on: 
Monday, March 30, 2020
Information
Tags: 
Banking, Professional services, Insurance, Finance, Finance, Economy, Money, Nationally recognized statistical rating organization, Credit rating agency, European Securities and Markets Authority, Bank
Geotags: 
NEW YORK, United States
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Organisation: 
KBRA AND KBRA EUROPE
Summary
Key Points: 
  • Only banks that adopt CECL are entitled to shield regulatory capital for the initial impact of adoption through a phase-in option that was finalized last year.
  • Banks that adhere to the old accounting method could potentially see a sharper hit to their regulatory capital than banks that now choose to adopt CECL.
  • KBRA is a full-service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO.
  • KBRA is also recognized by the National Association of Insurance Commissioners as a Credit Rating Provider and is a certified Credit Rating Agency (CRA) with the European Securities and Markets Authority (ESMA).


Kroll Bond Rating Agency (KBRA) releases an update on the new Current Expected Credit Loss (CECL) accounting rule and discusses why delayed adoption by some banks amid the current crisis may not be as strategically advantageous an option as it was at the start of the year.

In this report, KBRA also reviews the banking industry’s loan loss experience during the previous economic downturn and draws comparisons to the current downturn (which has just started), to explain why this time credit losses under either the old incurred loss method or CECL may evolve just as quickly. Only banks that adopt CECL are entitled to shield regulatory capital for the initial impact of adoption through a phase-in option that was finalized last year. Banks that adhere to the old accounting method could potentially see a sharper hit to their regulatory capital than banks that now choose to adopt CECL.

Click here to view the report.

About KBRA and KBRA Europe

KBRA is a full-service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. In addition, KBRA is designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized by the National Association of Insurance Commissioners as a Credit Rating Provider and is a certified Credit Rating Agency (CRA) with the European Securities and Markets Authority (ESMA). Kroll Bond Rating Agency Europe Limited is registered with ESMA as a CRA. Kroll Bond Rating Agency Europe Limited is located at 6-8 College Green, Dublin 2, Ireland.

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