Presentation at the "IASB Middle East Policy Forum" - May 2008

1. Emirates NBD
Middle East Policy Forum
Adoption & Implementation of IFRS in the
Regional Banking Sector : Key Challenges
Sanjay Uppal
Group Chief Financial Officer
Emirates Bank
Dubai. 13 May 2008

2. Key challenges : IAS
IAS 1 : Presentation of Financial Statements
Insight vs. Information overload
Information Recipients – relevance & use
IAS 39 : Financial Instruments – Recognition & Measurement
Liquidity Issues / Free Float
Fair Value vs. Fire Value
Aggravated Credit Meltdown
Securitization Issues
Fair Valuation of Debt ?
1

3. Key challenges : IAS
IAS 19 : Employee Benefits
Limited Actuary capabilities in the market
IAS 20 : Accounting for Government Grants & disclosure of Govt Assistance
Inconsistent adoption
Disclosure Requirements / robustness
2

4. Key challenges : IAS
IAS 24 : Related Party Disclosures
Sovereign Ownership
IAS 40 : Investment Property
Valuation challenges in the Region
Fair Value ?
Inconsistencies amongst Banks
3

5. Key challenges : IFRS
IFRS 3 : Business Combinations
Share f Share E h
Sh for Sh Exchange
Deterrent to domestic consolidation ?
Proforma / Business Combination – Investor Communication
Valuation of Core deposit Intangible - ‘Hot Money’
Pooling of Interest ?
IFRS 7 : Financial Instruments - Disclosures
Insight
I i ht vs. Information overload
I f ti l d
Information Recipients – relevance & use
4

6. Key challenges : Others
Property Companies & Businesses
Percentage of Completion vs. Completed Contracts
True Value of Company ?
fC
Islamic Banking
IAS & IFRS adoption ?
Banking business vs. Private Equity vs. Asset Management
Opinion difference in Sharia Boards
Consolidation of strategic equity participations & private equity i t
C lid ti f t t i it ti i ti i t it interests
t
Previously recognized on the basis of equity accounting
Consequence for those banks which actively engaged in p
q y g g private equity
q y
5

7. Key challenges : Others
Board of Directors buy-in & support
Legacy systems
Awareness : Under-estimation of effort requirement
Data gaps : New data requirements
Materiality : Definition
Conflicts with other projects (e.g. Basel II)
Acceptance of change in the institution
Knowledge transfer & training
IFRS interpretation issues & market inconsistencies
p
Resource availability : Skill & experience
Regulatory environment
6