The International Financial Reporting Standard (IFRS) 9 is due to come into force on 1 January 2018. However, according to the poll of 91 banks, 46% do not consider that they own the resources needed to build the changes in period, and two thirds do not know how the vary will affect their balance sheets, Deloitte said in its sixth global IFRS banking survey report.

IFRS 9 was issued by the London-based International Accounting Standards Board and forms piece of the body’s response to the global financial crisis. It will require firms to account for expected credit losses at the point that they first recognise financial instruments, and to recognise full lifetime expected losses at an earlier stage.

The IFRS rules are designed to be used by listed companies when compiling accounts, in order to build them understandable and easy to compare across international boundaries. More than 100 countries currently require or grant the employ of IFRS, although the US is a notable exception. The US Generally Accepted Accounting Principles are overseen by the Financial Accounting Standards Board.

70% of the banks surveyed believe IFRS9 will reduce their core tier unit capital by 0.5% and the “immense majority” do not know how their regulators will incorporate IFRS 9 numbers into regulatory capital estimates, Deloitte said.

Analysis by Barclays in September 2015 showed that the introduction of IFRS 9 could erode banks’ core capital, increasing the amount they own to set aside to cover the cost of loans on their books.

The total cost of the vary, including entire internal and external costs, is estimated at between €25 million and €100 million, according to almost 40% of banks. Only 28% expect costs to come in below €5 million. However, over three quarters of this budget has yet to be spent, Deloitte said.