By Adam Ziarkewicz, Director of Credit Portfolio Management, Bank Pocztowy.
Adam, can you please tell the Risk Insights readers a little bit about yourself, your experiences and what your current professional focus is?
I am risk specialist focused on credit risk with over 10 years of experience. I am also certified FRM and member of GARP. I started my professional career in one of major consulting firms (EY), where I spent over 3 years in Financial Risk Management Department. I have been working in medium sized polish bank (Bank Pocztowy) for over six years now first as head of impairment provisions and portfolio analysis team and then for two years as Deputy Director of Credit Risk Department. I am responsible for impairment provisioning under International Financial Reporting Standards, CRR (credit risk), credit risk assessment and valuation. I was responsible for IFRS 9 implementation in the area of impairment.
What, for you, are the benefits of attending a conference like the ‘IFRS 9 Summit’?
I believe, that the benefits are huge. It is always good to share views with fellow managers and experts and in my case as the representative of relatively small institution it’s especially important to have the chance to get familiar with solutions adopted by major banking groups.
What are the key considerations that need to be made when embedding new methodology and making judgement on portfolio basis?
I would say that key consideration is the desired level of complexity of your methodology. The answer to this question depends after all on the size of the institution, financial and human resources, available data, quality of the models that you already have in place. In my opinion usually the best option is to build possibly simple methodology, which of course have to be compliant with the standard and in line with the complexity of your institution.
In your opinion, how important is transparent decision making when credit risk increases significantly?
It’s crucial as the stage migrations are key sources of the new volatility of provisions and lack of comparability between institutions which IFRS 9 created. I believe that (at least at polish market) the best practices in this field are still to be created.
How do you see the impact of IFRS 9 evolving over the next 6-12 months?
I would definitely expect some convergence of bank’s approaches (for example in terms of transfer logic) and increase in figures comparability but I assume that this process will last even longer. I would like to give you an example from our local market. Polish Financial Authority informed the institutions that the regulator is planning to publish the recommendation on impairment in the middle of 2019. In the letter, they also stated that the recommendation is expected to have impact on banks IFRS 9 opening balances.