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WSBI-ESBG response to ​​​IASB Tentative Agenda Decision — Customers’ right to access suppliers application software

WSBI-ESBG response to ​​​IASB Tentative Agenda Decision — Customers’ right to access suppliers application software

​​​​​​IASB Tentative Agenda Decision — Customers’ right to access

suppliers application software

WSBI (World Savings and Retail Banking Group) | ESBG (European Savings and Retail Banking Group)

Rue Marie-Thérèse, 11 - B-1000 Brussels

ESBG Transparency Register ID 8765978796-80

28 January 2019​




WSBI-ESBG welcomes the opportunity to comment on the IFRS Interpretations Committee’s tentative decision on customers’ right to access suppliers application software hosted on the cloud.

We would like to highlight that we share the Committee’s view that the requirements in existing IFRS Standards provide an adequate basis for a company to account for its rights to access a supplier’s application software in SaaS arrangements. More specifically, we welcome the clarification if a contract conveys to the customer only the right to receive access to the supplier’s application software over the contract term, the contract does not contain a lease and consequently is a service contract.

For a contract that contains a software lease (because the customer has both (1) the right to obtain substantially all the economic benefits from the use of the identified asset and (2) the right to direct the use of that asset), the Committee concluded that a software lease is a licensing agreement within the scope of IAS 38, and not IFRS 16.

We acknowledge the crucial changes in the internal and external environment of banking institutions and how the use of digital technologies are transforming and impacting their business models (i.e. new generation of bank customers and new client expectations, the digitalisation of the economy and society, competition from the FinTech sector, etc.).

Banks are subject to extensive and comprehensive regulations that establish capital definitions and minimal capital requirements and, accordingly, we appreciate the work the Committee has carried out to address the challenges that may arise in identifying if those arrangements are within the scope of IFRS 16 or IAS 38 and their subsequent measurement.

Nevertheless, as a more general comment that might be considered by the IASB in the future, we would like to point out to the difficulty in practice to distinguish application software and system software. Depending on where companies the draw the line that distinguishes between them both it will determine the amounts being mainly presented as intangible and tangible assets in the balance sheet of financial institutions. In addition, we share most of the concerns depicted in the supporting papers of the Committee’s discussion regarding the difficulties to estimate the cost of an intangible asset, and any related liability, evaluated from license fees when there is uncertainty about the extent of future payments (contract extension options) or when there are variable and/or contingent payments

to be made.


About WSBI

The World Savings and Retail Banking Institute (WSBI) represents the interests of 6,000 savings and retail banks globally, with total assets of $15 trillion and serving some 1.3 billion customers in nearly 80 countries (as of 2016). Founded in 1924, the institute focuses on international regulatory issues that affect the savings and retail banking industry. It supports the achievement of sustainable, inclusive, balanced growth and job creation, whether in industrialised or less developed countries. 

World Savings and Retail Banking Institute - aisbl

Rue Marie-Thérèse, 11 ■ B-1000 Brussels ■ Tel: +32 2 211 11 11 ■ Fax : +32 2 211 11 99

Info@wsbi-esbg.org ■ www.wsbi-esbg.org


About ESBG

ESBG represents the locally focused European banking sector, helping savings and retail banks in 20 European countries strengthen their unique approach that focuses on providing service to local communities and boosting SMEs. An advocate for a proportionate approach to banking rules, ESBG unites at EU level some 1,000 banks, which together employ 780,000 people driven to innovate at 56,000 outlets. ESBG members have total assets of €6.2 trillion, provide €500 billion in SME loans, and serve 150 million Europeans seeking retail banking services. ESBG members are committed to further unleash the promise of sustainable, responsible 21st century banking. Learn more at www.wsbi-esbg.org


European Savings and Retail Banking Group – aisbl

Rue Marie-Thérèse, 11 ■ B-1000 Brussels ■ Tel: +32 2 211 11 11 ■ Fax : +32 2 211 11 99

Info@wsbi-esbg.org ■ www. wsbi-esbg.org

Published by WSBI-ESBG. 28 January 2019


Accounting Standards