EBF publishes response to IASB Risk Mitigation Accounting proposals

Brussels, 29 October 2026 – The European Banking Federation has published its response to the IASB Exposure Draft on Risk Mitigation Accounting (RMA).

Following extensive analysis by banks and accounting specialists, the EBF supports the IASB’s objective of developing a comprehensive solution for dynamic portfolio risk management. However, the EBF concludes that the proposed model is not yet ready to replace existing portfolio hedge accounting in its current form.

Why this matters

The key question is not simply whether accounting aligns with risk management, but whether it faithfully represents the economics of repricing-risk management, materially mitigates artificial accounting volatility and remains operationally viable.

For banks, most banking book activities are managed on a hold-to-collect or hold-to-collect-and-sell basis. Differences in the accounting treatment of managed exposures and risk management derivatives can create artificial volatility that does not reflect the underlying economics.

Our assessment

The Exposure Draft contains several constructive elements, including the recognition of net exposures and open portfolios, the use of behavioural assumptions for non-maturing deposits and greater use of risk-management concepts.

However, based on extensive analysis, the EBF concludes that the proposed model is not yet ready to replace existing portfolio hedge accounting in its current form.

Importantly, this conclusion does not arise from one isolated requirement. Rather, it reflects the combined effect of the model’s eligibility criteria, measurement mechanics, benchmark derivative requirements, safeguard mechanisms and discontinuance rules. Together, these may leave artificial accounting volatility unresolved while creating significant operational complexity.

Evidence from the industry

The EBF Expert Group brought together 13 EU and non-EU banks representing €17 trillion in total assets. Thirty-five specialists invested more than 1,500 hours analysing the proposals, supported by detailed technical papers and practical examples.

This work provided the basis for assessing not only the conceptual merits of the proposed model, but also how its different components would interact in practice.

EBF recommendations

The EBF encourages the IASB to:

Broaden the success criterion so that RMA outcomes represent risk management, materially mitigate artificial accounting volatility and are operationally viable.
Rework the package as a whole, addressing scope, measurement, safeguards and discontinuance together.
Simplify disclosures to provide decision-useful information without creating a misleading picture of overall IRRBB or revealing commercially sensitive information.
Validate a materially revised package through practical field testing and re-exposure before replacing existing portfolio hedge accounting.

Until a replacement has been demonstrated to materially reduce artificial accounting volatility, operate reliably and provide a meaningful improvement over current requirements, existing portfolio hedge accounting should remain available.

If a revised RMA model ultimately does not meet these objectives, alternative approaches should remain open for consideration.

The EBF thanks the IASB for its engagement and remains committed to constructive dialogue on a robust, workable and globally consistent solution.

Supporting technical analysis

The EBF’s supporting materials provide detailed analysis of artificial accounting volatility, benchmark derivative mechanics, over-hedging restrictions, disclosures and implementation challenges.

Read the EBF comment letter and supporting materials:

EBF Comment Letter

EBF Mitigation Accounting Responses

EBF Accounting Papers

For more information please contact:

Gonzalo Gasos, Senior Director - Prudential Policy and Supervision, g.gasos@ebf.eu

Francisco Saravia, Senior Policy Adviser - Prudential Policy and Supervision, F.Saravia@ebf.eu

About the EBF:
The European Banking Federation is the voice of the European banking sector, bringing together national banking associations from across Europe. The EBF is committed to a thriving European economy that is underpinned by a stable, secure and inclusive financial ecosystem, and to a flourishing society where financing is available to fund the dreams of citizens, businesses and innovators everywhere.