It could be a long winter for European banks hoping to use the replacement for a controversial accounting rule blamed for exacerbating the global financial crisis.

Bruegel, a Brussels-based think tank, believes the European Commission may wait until a new commissioner is unveiled before it adopts last week’s new fair value standard.

The International Accounting Standards Board (IASB) released part one of its three part replacement for IAS 39. It’s spent the past twelve months placating European finance ministers and answering prickly hurry-up letters sent in a bid to accelerate the process.

But upon release of the standard, Europe decided against immediate adoption.
Nicolas Véron, senior research fellow at Bruegel, said the wait may carry on until a replacement for commissioner Charlie McCreevy is found ­ pushing the adoption date into next year. “It is only natural that, because it is a very important decision, it should not be taken by an outgoing commissioner but by a newcomer.”

He said Europe may choose to wait until the remaining two parts of the fair value standards are released. It will be at least eight months until part two is finished.

He added the relationship with Europe has broken down and any adoption of the standard might be conditional on the IASB making structural changes.

“The adoption decision will not just be taken on the standards’ merits, it will be taken within a broad set of parameters, including some that relate to the governance process and oversight,” Véron said.

Last week HSBC’s Douglas Flint wrote to McCreevy concerned that delay would put companies in a competitive disadvantage. “The timely endorsement by the EU is necessary to address an urgent need to improve the accounting for financial instruments,” he said in the letter, seen by Accountancy Age.