Participants Profile

Transcription

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2 Content

3 Participants Profile 3

4 Participants Profile Question 1: What is your gender? a. Male b. Female 4

5 Participants Profile Question 2: What is your relation to the European Union? a. Member State b. Candidate Country c. Potential Candidate d. Other 5

6 Participants Profile Question 3: For what type of institution do you work for? a. Central Bank b. Ministry of Finance c. Supervisory Agency d. Integrated Supervisor e. Other 6

7 Participants Profile Question 4: What part of the financial sector do you cover in your current role? a. Banking b. Insurance c. Listed companies d. All of the above e. Financial sector in general f. Other 7

8 Participants Profile Question 5: What type of position do you hold? a. Regulation / Supervision b. Senior Management c. Accounting d. Other 8

9 IFRS Workshop Objective Of The Workshop 1. Enhance Participants Understanding of IFRS 2. Provide Tools to Improve Effectiveness Of Regulation 3. Raise Awareness Of the Value Of Regular Communication with Preparers and Auditors 4. Challenge Information Provided by Preparers and Reviewed by Auditors 9

10 IFRS Workshop Source: World Bank 10

11 Content

12 Banking markets 12

13 Banking markets 13

14 Insurance markets 14

15 Insurance markets 15

16 IFRS Adoption Status in Europe 16

17 Enforcement Practices 17

18 Enforcement Practices 18

19 Content

20 Disclosure Analysis Basis of preparation: 13 banks from the ECA region 1. Albania BKT 2. Armenia ACBA Credit Agricole 3. Azerbaijan The International Bank of Azerbaijan 4. Belarus Belarusbank 5. Bosna i Hercegovina Raiffeisen Bank 6. Croatia Zagrebacka Banka 7. Georgia TBC Bank 8. Kosovo ProCredit Bank 9. Macedonia Komercijalna Banka ad Skopje 10. Moldova Moldova Agroinbank 11. Montenegro CKB 12. Serbia BANCA INTESA 13. Ukraine Joint Stock Commercial Industrial & Investment Bank 20

21 Disclosure Analysis: Overview Overall comments Credit risk disclosures are overall good Few mention of going concern in financial statements, but banks mention of economic uncertainty Entities are supposed to base their disclosures on information provided internally to key management There is a wide range in terms of quality of disclosure and, at times, a minimalistic compliance approach Very few banks make an effort to customize their accounting policies Most of the banks copy and paste what is written in the financial reporting standards instead of adopting an entity specific approach to disclosures For example, very few banks are involved in trading activities, but most of them have disclosures of their accounting policy as stated in IFRS 39 There are few disclosures on NPLs users would expect a disclosure on NPL threshold The reconciliation between shareholders equity and regulatory capital is seldom disclosed 21

22 Disclosure Analysis: Overview 2 financial statements are based on IFRS modified by local regulation (for example Banca Intesa from Serbia is using IFRS as translated and published in the official gazette in 2009) Albania BKT uses the LEK as functional currency and the USD as presentation currency in order to accommodate investors 22

23 Disclosure Analysis: Range of Instruments All banks present Cash and AFS categories 5 clearly state the use of T-bills, 2 have equivalent terms (i.e. term placements) 7 have HTM, only 2 precise they do not have any in their policy notes Limited use of subordinated debt Overall limited use of derivatives on both sides of the balance sheet (only FX products and some swaps) 23

24 Disclosure Analysis: Risk All banks disclosed in general terms how the bank manages risk A majority of the banks do not provide specific information on credit limits 24

25 Disclosure Analysis: Risk All banks disclosed how the bank/group manages liquidity risk by explaining the nature of liquidity risk and how it is managed IFRS7.39 In 9 cases, the frequency of monitoring liquidity risk is mentioned Similarly for the use of stress testing Maturity tables are presented by all banks, only 1 presented a VAR analysis Central Bank liquidity requirements are not always mentioned (9 out of 13). 25

26 Disclosure Analysis: Risk Currency risk: Tables are presented in terms of currency in the majority of the banks (12 out of 13) Most banks present sensitivity analysis for currency risk Interest rate risk: Effective yields are stated for 5 banks Repricing tables are stated for 8 banks All banks disclose sensitivity analysis for interest rate risk 26

27 Capital Management & Regulatory Requirements IAS 1 requires: Qualitative information about the objectives, policies and processes for managing capital A description of what is managed as capital An explanation of externally imposed capital requirements and whether there has been compliance in the period 27

28 Policies Estimates & Judgement The description of judgements and estimates is disclosed by 5 banks with regard to impairment allowance and by 3 banks with regard to HTM investments There is more information on FV determination, with valuation techniques and models being explained by 9 banks Fair value and carrying value tables are presented for 9 banks Due to limited trading activities there are limited disclosures on level 3 FV determination 28

29 APPENDIX: Capital Management Example of International Bank of Azerbaijan MANAGEMENT OF CAPITAL The objectives of management when managing the Group s capital are (i) to comply with the capital requirements set by the CBAR, (ii) to safeguard the Group s ability to continue as a going concern and (iii) to maintain a sufficient capital base to achieve a capital adequacy ratio based on Basel I of at least 6%. Compliance with capital adequacy ratios set by the CBAR is monitored monthly with reports outlining their calculation reviewed and signed by the Head of Audit Committee, First Deputy of Chairman of the Board, Chief Financial Officer, Internal Audit Department and Accounting and Budgeting Department. The other objectives of capital management are evaluated on ongoing basis. Under the current capital requirements set by the CBAR banks have to: (a) hold the minimum level of total statutory capital of AZN 10,000 thousand (December 31, 2011: AZN 10,000 thousand); (b) maintain a ratio of regulatory capital to risk weighted assets ( statutory capital ratio ) at or above a prescribed minimum of 12% (December 31, 2011: 12%) and (c) maintain a ratio of tier-1 capital to the risk-weighted assets (the Tier-1 capital ratio ) at or above the prescribed minimum of 6% (December 31, 2011: 6%). Under the current capital requirements set by the CBRF, banks have to (i) comply with the capital requirements set by the Central Bank of the Russian Federation, (ii) safeguard the Bank s ability to continue as a going concern and (iii) maintain a sufficient capital base to achieve a capital adequacy ratios of total (8%) and Tier 1 capital (4%) to risk weighted assets. As at December 31, 2012, the Bank has complied with all capital requirements imposed by CBAR. (The Bank was not in compliance with these requirements at December 31, 2011). The Group and the Bank are also subject to requirements established by covenants stated in loan agreements, including capital adequacy levels calculated in accordance with the requirements of the Basel Accord, as defined in the International Convergence of Capital Measurement and Capital Standards (updated April 1998). Source: - International Bank of Azerbaijan, note 28 page 70 29

30 APPENDIX: Capital Management Example of International Bank of Azerbaijan The composition of the Group s capital calculated in accordance with Basel I, based on the consolidated financial statements of the Group, is as follows: As an integral part of the Bank s capital management procedures the Chief Financial Officer performs regular monitoring of compliance with the externally imposed capital requirements and the monitoring reports are reviewed and approved by Head of Audit Committee, Chairman of the Board of Directors and the Head of Internal Audit Department. As at December 31, 2012 the Group and the Bank have complied with all externally imposed capital requirements. Source: - International Bank of Azerbaijan, note 28 page 70 30

31 Content

32 APPENDIX: Application of IFRS New EU Member States Source: PwC s IFRS Adoption by Country (Dec 2012); World Bank Czech Republic, Latvia, Poland and Slovenia are part of the CFRR FRTAP Program 32

33 APPENDIX: Application of IFRS New EU Member States Source: PwC s IFRS Adoption by Country (Dec 2012); World Bank Czech Republic, Latvia, Poland and Slovenia are part of the CFRR FRTAP Program 33

34 APPENDIX: Application of IFRS REPARIS countries Source: PwC s IFRS Adoption by Country (Dec 2012); World Bank Croatia is part of the World Bank CFRR REPARIS program and a new EU member since July

35 APPENDIX: Application of IFRS REPARIS countries Source: PwC s IFRS Adoption by Country (Dec 2012); World Bank 35

36 APPENDIX: Application of IFRS STAREP countries Source: PwC s IFRS Adoption by Country (Dec 2012); World Bank 36

37 APPENDIX: Application of IFRS STAREP countries Source: PwC s IFRS Adoption by Country (Dec 2012); World Bank 37

38 Thank you DISCLAIMER The statements, findings, interpretations and conclusions expressed in this presentation do not necessarily reflect the view of, or are endorsements from the Board of Executive Directors of the World Bank, or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this presentation. The World Bank is not responsible for and hereby expressly disclaims any and all liability for any and all damages or loss resulting from the use of any third party. The World Bank has based this document on information obtained from sources it believes to be reliable but which have not been independently verified. Reproduction of this document, in whole or in part, or disclosure of any of its contents, without prior consent of the World Bank is prohibited.