Intesa Sanpaolo Selects Bloomberg IFRS 9 SPPI Data To Streamline Adoption Of New Accounting Standard

London and New York - 3 April 2017

Bloomberg announced today that Intesa Sanpaolo, the Italian banking group, is using accounting data from Bloomberg to comply with the International Financial Reporting Standard 9, known as IFRS 9, an accounting framework released by the International Accounting Standards Board (IASB).

Intesa is the latest financial services organization to choose Bloomberg's IFRS 9 Solely Payments of Principal and Interest (SPPI) data to determine how securities should be classified under the new accounting standard. Accounting and reporting departments can use Bloomberg's IFRS 9 SPPI data to systematically classify securities and conclude whether they pass or fail the SPPI test.

IFRS 9 will replace the existing IAS 39 accounting standard that prescribes how financial organizations should classify and value financial instruments on a current and ongoing basis. The new guidelines are designed to bring greater transparency and consistency to financial instrument accounting practices when they take effect in January 2018. The guidelines also necessitate more descriptive security-level data to reach an informed conclusion about how they should be classified and valued.

"The IFRS 9 SPPI requirements present a tremendous challenge because they require a data-intensive review of investment and loan portfolios to determine how securities should be treated," said Chris Casey, Global Head of Regulatory and Reference Data at Bloomberg. "To comply with confidence, organizations need high-quality instrument data and a comprehensive methodology that allows them to accurately and defensibly perform this analysis on an ongoing basis."

Nicola Torresani Head of Debt Pricing and Analysis at Intesa Sanpaolo said, "Using Bloomberg's IFRS 9 SPPI in our accounting process will help us classify portfolio securities accurately and consistently across our organization. We also expect it will save us time and resources required to evaluate how our investments should be treated under the new standard. Bloomberg delivers high-quality data in a form we can readily use to assess the impact of the new rules on our accounting, reporting and risk management processes. We feel confident in the analysis performed by Bloomberg's product and the methodology that drives it."

The new IFRS 9 classification and measurement model requires an assessment of whether a financial asset's contractual cashflows are solely payments of principal and interest, or SPPI. This SPPI test is done to identify whether an instrument has non-basic features and is presented at fair value, instead of using the effective interest method. 

Making this determination on an instrument-by-instrument basis requires tremendous manual effort, as the prospectuses and legal documents for each financial asset must be reviewed individually and thoroughly to identify potentially non-SPPI features or cashflows. In order to properly assess and conclude the SPPI test, and the resulting classification and measurement of an investment portfolio, IFRS filers need to assess SPPI characteristics at a security level on a large scale. This analysis requires a large amount of descriptive data and the ability to organize this data in logical rule sets.

Bloomberg's IFRS 9 SPPI data automates the process of performing the SPPI test and was developed in collaboration with a number of key industry stakeholders to deliver an industry standard SPPI classification.

The IFRS 9 SPPI solution is part of Bloomberg's Regulatory and Accounting Product suite, which assists senior compliance officers at banks, asset managers, insurers and other financial organizations navigate an increasingly complex regulatory and accounting disclosure environment. 

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The Intesa Sanpaolo Group is the leading provider of financial products and services to both households and businesses in Italy. It has 11.1 million customers and approximately 4,000 branches in Italy, is the country's leading banking group. It is also one of the top banking groups in Europe.

The Group was formed in January 2007 following the merger of Sanpaolo IMI and Banca Intesa. Both these banks were already key players in the Italian market and had contributed to the consolidation process of the country's banking industry.

The Group also has strategic operations in Central and Eastern Europe and in Middle Eastern and North African countries. It is among the top players in several countries with 7.8 million customers and a network of approximately 1,200 branches. Through its local subsidiary banks, the Intesa Sanpaolo Group ranks first in Serbia, second in Croatia and Slovakia, fourth in Albania, fifth in Egypt, seventh in Bosnia and Herzegovina, Slovenia and Hungary.

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