MILAN (Reuters) - A new accounting principle dubbed IFRS 9, which comes into force in January, will pose particular problems for smaller Italian banks which are having trouble preparing because they lack good quality data, the Bank of Italy said on Friday.
In its twice-yearly Financial Stability Report, the central bank calculated the IFRS 9 rule will take on average 38 basis points off Italian banks’ best-quality capital.
The estimated negative impact on smaller lenders is higher, at an average 47 basis points.
Separately on Friday, the European Central Bank calculated an average negative impact of 40 basis points for European banks that are considered best prepared for the changes.
The IFRS9 rule forces banks to book charges based on expected, instead of actual, losses. The negative capital impact for Italian banks stems mainly from higher loan writedowns, the Bank of Italy said.
Smaller Italian banks lack good-quality data to be able to build the models necessary to calculate the projected losses, it added.
Patchy loan data scattered over thousands of paper documents have turned out to be a major issue for Italian banks, making it hard for them to put a price on soured debts and forcing them to offer buyers a bigger discount when selling them.
(The story was refiled to add detail to clarify figure in paragraph 4)
Reporting by Valentina Za, editing by Gavin Jones