The International Accounting Standards Board IASB demised the IAS39 Incurred Loss standard and replaced it by the IFRS9 Expected Credit Loss (ECL) standard put in force in 2018. IFRS9 accounting requires banks to hold provisions for credit losses that are expected to occur. The amount of provisions is dependent on a staged methodology, which includes to increase provisions for loans whose credit quality has substantially deteriorated. 

The ECL is calculated for securities in the banking book based on a forward-looking approach with a view on expected losses. The requirement for using forward looking information applies to both IRS9 and CECL and adds significant complexity when compared to the previous impairment standards IAS39. Loss estimation is performed at stages recognizing any decreased credit quality and impairment for stages 2 and 3.