IFRS 9 for Internal Audit, Risk Management and Compliance professionalsin Banks and Financial Institutions

Bahrain, 3-4 September 2018

Refresher, validation and post-implementation challenges

Introduction 04

Agenda 05

Speakers 08

Contents

IFRS 9 implementation challenges4 All Rights Reserved — EY

Introduction

IFRS 9 is having significant impact on the financial statements of banks and other financial institutions. It stands high on the agenda of many internal teams given its wider implications across governance, risks, controls and processes.

This two-day seminar provides a comprehensive overview of the new financial reporting requirements contained in IFRS 9, which has become mandatory for accounting periods beginning on or after 1 January 2018.

Additionally this course is specifically tailored to the needs of Internal Auditors and other non-accounting banking professionals, to sufficiently equip them with a thorough understanding of the new standard for them to factor the implications of IFRS 9 in internal audit plan for the coming years as well as other relevant business processes in a bank. It also aims to assist the internal teams to compare the current skill set with an ideal skill set (modelling, credit risk, accounting).

The course is aimed at analyzing the main principles and requirements of IFRS 9, with emphasis on practical application issues and potential problems in auditing and controlling processes and solutions developed in the process of IFRS 9 implementation.

Target audienceInternal Audit, Risk Management, Compliance, IT and other professionals who are involved in IFRS 9 implementation activities.

IFRS 9 implementation challenges 5

Outline

1. Introduction

► IFRS 9 development process and reason behind substituting IAS 39 with a new standard on financial instruments accounting

► The foundations of IFRS 9

2. Classification and measurement

► Review of key changes to classification of financial assets and financial liabilities as compared with IAS 39

► New categories of financial assets under IFRS 9 (AC, FVPL, FVOCI)

► IFRS 9 classification criteria:

► Business model

► SPPI criterion

► Types of financial assets, which will and will not pass the SPPI test

► Modified time value of money and benchmark tests

► Accounting treatment of equity investments

► Financial liabilities designated to presentation at fair value through profit or loss and presentation of entity’s own risk

► Allowed reclassifications between categories

► Embedded derivatives under IFRS 9

Day 1 - IFRS 9 refresher

IFRS 9 implementation challenges6 All Rights Reserved — EY

Outline (contd)

3. Impairment of financial assets

The scope of the impairment requirements is now much broader. Previously, under IAS 39, loss allowances were only recorded for impaired exposures. Now, entities are required to record loss allowances for all credit exposures not measured at fair value through profit or loss.

The new standard outlines a ‘three-stage’ model (‘general model’) for impairment based on changes in credit quality since initial recognition The new requirements are designed to result in earlier recognition of credit losses, by necessitating a 12-month ECL allowance for all credit exposures. In addition, the recognition of lifetime ECLs is expected to be earlier and larger for all credit exposures that have significantly deteriorated (as compared to the recognition of individual incurred losses under IAS 39 today).

► The scope of application of impairment requirements

► Main differences between the “expected loss model” featured by IFRS 9 and the previously effective “incurred loss model” required by IS 39

► The concept of expected losses

► The “general approach” and its logic

► 12-month and lifetime expected losses

► Significant deterioration of credit risk

► Accounting treatment of assets in all stages of the general approach

► Risk scenarios and forward-looking information

► Accounting for credit risk allowances and impairment interest on stages 1, 2, and 3

► Definition of “default”

► Rebuttable presumptions, practical expedients and simplifications

► The “simplified approach” and assets eligible for simplified treatment

► POCI assets and their accounting treatment

► Asset modifications and their accounting treatment

Day 1 – IFRS 9 refresher (continued)

IFRS 9 implementation challenges 7

1. Validation techniques of ECL models

2. Validation case study

• PD modeling

• LGD modeling

• EAD Modeling

3. Practical challenges faced in implementation

4. IFRS 9 and impact on different functions of the banks (pricing, credit assessment, credit admin, IT etc.)

Day 2 – IFRS 9 Annual Validation, impact, and case studies

IFRS 9 implementation challenges 8

Nicholas Christodoulou

Speakers

Relevant training experience and clients

Nicholas has been training people in respect of Financial Statement Analysis, IFRS, auditing, accounting as well as a variety of business topics to corporate audiences in many countries including Poland, Hungary, Greece, Cyprus, Kuwait, Bahrain, Saudi Arabia, Dubai, Abu Dhabi etc. and trained participants from variety of clients, from Banks to financial institutions and many other industries. He has 16 years of professional teaching experience at all levels within the financial services industry, including executive training in management courses. He has been a Senior Trainer for EY in Europe and the MENA region, and in addition to that he has been preparing professionals for professional qualifications such as ACA, ACCA, CIA for a number of academic institutes, such as the EY Academy in Poland, the Cyprus Institute of Marketing, Cyprus College and the Pro Seminars Academy in Greece.

Training focus

• Financial Statement Analysis

• IFRS

• External and Internal Audit

• Corporate Governance

• Accounting

• Anti-Money Laundering

• Banking Issues

Background

An experienced professional both as a tutor as well as from a practical point of view. A long term career in Auditing, Bank industry, Corporate Governance, and International Accounting Standards provided him with different competencies which he uses in trainings. His teaching courses in Europe and Middle East provide him the opportunity to constantly enhance his personal development in such a degree that enables him to supply participants with plenty of practical examples in relation to the subjects he teaches.

His direct involvement as a full member of the Board of Directors for one of the largest Cooperative Savings Banks in Cyprus, provided him with all necessary experience to understand and evaluate the needs of all different users of financial information and further, and to deal with difficult practical issues in respect of the application of Corporate Governance across business with public interest. The role of the Chief Executive Officer provided him with management experience at the highest level and also responsibility of one of the biggest organizations in the island, including inspiring and dealing with all soft skills issues relevant to the management of personnel. He served the bank as a full member of the Board of Directors and he also had similar positions in the Personnel and the Risk Assessment Committee. Currently, he is the CEO of the Business Unit of the biggest Construction Group in Cyprus with operations abroad.

IFRS 9 implementation challenges 9

Anish Nair

Other Risk Management Experience

• Performed RWA optimization and Capital efficiency exercise for more than three banks and significantly improved the CAR ratios basis the exercise (highest optimization being 187 basis points in CET1 ratio)

• Assisted more than 5 leading banks in compliance to Pillar 1 regulatory guidelines in India and overseas. Key activities performed are data validation, asset classification, RWA computation along with capital analysis

• Anish has worked on multiple engagements for review/validation and development of ICAAP and Stress Testing Framework as part of Pillar II implementation. Activities performed includes material risk assessment, development/review of quantitative and qualitative models for estimation of material risks, Scenario building, sensitivity analysis, impact of stress testing on capital/business strategy, capital budgeting, etc.

• Anish has also worked on the design and implementation of the group risk and enterprise risk management at the largest Indian Banking conglomerate, including development of frameworks for governance, risk appetite, risk assessment and risk culture

• Anish has worked on a Legal Entity Restructuring project whereby he assisted a large banking group in analyzingvarious options of restructuring its subsidiaries like Joint Venture, Holding company, proportionate de-consolidation and their feasibility considering the Capital and Transactional implications

Led a team of consultants and undertook projects for a Global Bank to support their Basel Reporting (BMR) team:

• Worked on the design and implementation of Target Operating Model for the Basel Measurement & Reporting function for improving the scalability and generating efficiencies — both hard and soft benefits attained

• SME role in key regulatory change projects and strategic initiatives: FED Exam on Capital Calculations review, AIRB RWA Self-Assessment — IB portfolio, Ccy Buffer Calculations, BCBS 239 — RWA Data Lineage and Modelling, Pillar 3 revised disclosure, Impact of proposed key Basel IV changes on the Pillar 1 RWA — Eq. Inv. in funds

Background

• A Financial Risk Manager professional with more than 8 years of work experience primarily in the area of Basel regulatory migration/compliance, Credit Risk Management and banking transformation projects

• Anish joined EY in 2015 and is working with the Financial Services Risk Management practice in EY

Skills

• Basel II and Basel II IRB migrations

• Basel regulatory reforms implementation

• Enterprise Risk management

• Model Validation (IFRS 9 and IRB)

• Pillar 1 RWA Optimization

• Pillar 2/ICAAP implementation

• Stress testing and Scenario Analysis

• Credit Risk (Policy, Procedures, Frameworks and Reporting Templates)

Professional experience

Model Validation Experience (IFRS 9 and IRB)

• Anish has led multiple engagements on validation of IFRS 9 ECL impairment models for a pool of 8 banks in Middle East and similarly for four banks in Africa region. The work included conceptual review of the IFRS 9 model development policies and frameworks, re-performance and/or statistical validation of the impairment models.

• He has developed the Model Validation Framework and performed Qualitative as well as Quantitative Model Validation on retail scorecard and non retail rating models using statistical methods for more than five banks in India

• Developed both application and behavioural scorecards for retail portfolio for multiple banks across geographies. Also developed homogenous retail pools using decision tree algorithms for IRB compliance

Registration formIFRS 9 for Internal Audit, Risk Management and Compliance professionals in Banks and Financial Institutions | 3-4 September 2018

Kingdom of Bahrain

All courses are subjected to a minimum number of participants. If a course has less than the required number, the EY Training Center (EYTC) is entitled to cancel the course at its absolute discretion, without liability. In such instances, the EYTC Team can offer the participants alternative dates or program options that are at the same level or standard.

Registration type: Individual Sponsored

Company :

1. Name :

Role :

Email :

Mobile :

2. Name :

Role :

Email :

Mobile :

3. Name :

Role :

Email :

Mobile :

Contacts

Should you have any inquiries, please contact:

Name: Thuraya Akbar

Tel: +973 17514769

Email: business.courses@bh.ey.com

4. Name :

Role :

Email :

Mobile :

Invoice to be addressed to (if different than the participant)

PaymentsAn invoice with all payment details will be sent upon receipt of the registration form. Payment must be received in full prior to the commencement of the course. We accept cash, cheque or bank transfer.

The above fees are inclusive of: • Certificate of Attendance (16 CPE/CPD hours)• Training material• Lunch and refreshments

Course dates

3-4 September 2018, from 09:00 to 17:00 Monday-Tuesday

Cancellation and refund policy

Refunds can be claimed if cancellation is received at least 10 days prior to the event. Replacement of an attendee with another is free of charge.

The fees will be completely refunded in case the event is postponed or canceled by EY.

Name :

Role :

Company :

PO box :

Email :

Mobile :

Social media consent

We aim to keep our external community engaged by sharing pictures and videos from our training programs to social media.

As your privacy matters, we would like to make sure that you have no objections for us to post pictures or videos in which you might appear. Please let us know your preference by checking one of the below:

I have no objections to appearing on EY social media posts

I do not wish to appear on any EY social media post

Package Fee (BHD)

Early bird registration (before 10 August 2018)

416

Group registration (3 participants or more) 416

Full two days training 520

EY | Assurance | Tax | Transactions | Advisory

About EY EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities.

EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit ey.com.

The MENA practice of EY has been operating in the region since 1923. For more than 90 years, we have grown to more than 6,000 people united across 21 offices and 16 countries, sharing the same values and an unwavering commitment to quality. As an organization, we continue to develop outstanding leaders who deliver exceptional services to our clients and who contribute to our communities. We are proud of our accomplishments over the years, reaffirming our position as the largest and most established professional services organization in the region.

© 2018 EYGM Limited.All Rights Reserved.

ED None

This material has been prepared for general informational purposes only and is not intended to be relied upon as accounting, tax or other professional advice. Please refer to your advisors for specific advice.

ey.com/mena