While in principle the classification and measurement requirements in IFRS 9 work as intended, there is a number of important issues that EACB members would like to underline.
As regards the assessment of a business model for managing financial assets, we would like to highlight the treatment of "syndication in the lending business" as problematic. The evidence of the AC-compliant cash flows must be provided on a regular basis, due to the fundamentally questionable mandatory assignment of syndications to sales transactions.
When comes to the contractual cash flow characteristics assessment, we believe that the implementation of the necessary processes for checking the SPPI conformity is very time-consuming and complex.
In our opinion, instead of exercising the FVOCI option for equity instruments, the readers of the balance sheet could get a better insight into the group's earnings position if the amounts accumulated in the OCI would be recycled through profit or loss in the income statement at the time of the disposal of such an asset.