The new IFRS 9 framework means financial institutions have to check whether an asset’s contractual cash flows are solely payments of principal and interest (SPPI), in order to determine whether the asset has non-basic features, and whether it is presented at a fair value.
It also necessitates more descriptive data in order to come to an informed conclusion on how securities should be classified and valued.
Intesa Sanpaolo will use Bloomberg’s IFRS 9 SPPI data, part of its Regulatory and Accounting product suite, to determine how securities should be classified under the new framework.
Chris Casey, global head of regulatory and reference data at Bloomberg, said: “The IFRS 9 SPPI requirements present a tremendous challenge because they require a data-intensive review of investment and loan portfolios to determine how securities should be treated.”
He added: “To comply with confidence, organisations need high-quality instrument data and a comprehensive methodology that allows them to accurately and defensibly perform this analysis on an ongoing basis.”
Nicola Torresani, head of debt pricing and analysis at Intesa Sanpaolo, commented: “Using Bloomberg’s IFRS 9 SPPI in our accounting process will help us classify portfolio securities accurately and consistently across our organisation.”
“We also expect it will save us time and resources required to evaluate how our investments should be treated under the new standard. Bloomberg delivers high-quality data in a form we can readily use to assess the impact of the new rules on our accounting, reporting and risk management processes.”
The new IFRS 9 guidelines are intended to improve transparency and consistency in financial instrument accounting practices. They will come into effect in January 2018.