The implementation of the IFRS 9 accounting standard in Italy by small banks and financial intermediaries: initial evidence

The IFRS 9 accounting standard, which entered into force in 2018, introduced far-reaching innovations, has been applied in different ways by banking and other financial institutions. Thus, sometimes relatively simple solutions have been adopted, in line with unsophisticated business operations, while in other cases, more complex choices were required. Additionally, the outbreak of the COVID-19 pandemic posed challenges for the application of the standard. In this scenario, in the second half of 2020, the Bank of Italy launched a survey on a sample of directly supervised entities, aiming to analyse the implementation of the new standard and the possible impact of the pandemic on accounting choices. This work provides a summary of the results with a dual purpose. First, it aims to provide evidence of the level of implementation of the standard by less significant banks and secondly, it highlights methodological choices or practices that may not fully comply with the standard, with potential implications for the ratios relevant for prudential supervision purposes.