RegulationAccounting StandardsEuro bankers want no expansion of fair value in new bank rules

Euro bankers want no expansion of fair value in new bank rules

Banks will be forced to plan for bad loans under proposals from IASB

European Central bankers warned against any expansion of fair value in new
proposals aimed at forcing banks to plan for bad loans,
Reuters
news agency reports
.

The International Accounting Standards Board (IASB) last year proposed new
rules which would force banks to provision across all loans, good or bad, for
those that turn bad.

While there is broad consensus between European central bankers and the IASB
on the need for banks to plan for bad loans, there remains differences in
approach. Central bankers prefer a “through the cycle” approach consistent with
their responsibility to maintain stable markets.

The IASB has proposed an expected loss model, which aims to provide more
transparency.

The IASB said it is not planning to expand its use of fair value, which
forces assets to be valued at market prices, in its proposed banking model.
Despite this, central banks are warning against the expansion of fair value,
which has been blamed for exaggerating the effects of the credit crisis last
year.

European Central Bank President, Jean-Claude Trichet told Reuters: “It is
essential that accounting standards setters and supervisors develop a truly
robust provisioning approach based on expected losses,” the group, chaired by
European Central Bank President, Jean-Claude Trichet, said in a statement.

Read the full story:
Central
bankers turn up heat on accounting reform

Related Articles

IASB overhauls insurance accounting with issuance of IFRS 17

Accounting Standards IASB overhauls insurance accounting with issuance of IFRS 17

7m Alia Shoaib, Reporter
Former CFO joins IASB board

Accounting Standards Former CFO joins IASB board

1y Stephanie Wix, Writer
MEP calls for IASB pay cuts

Accounting Standards MEP calls for IASB pay cuts

1y Richard Crump, Writer
IASB issues amendments to insurance contracts standard

Accounting Standards IASB issues amendments to insurance contracts standard

1y Richard Crump, Writer
IASB chairman Hoogervorst to prioritise communication effectiveness of financial statements during second term

Accounting Standards IASB chairman Hoogervorst to prioritise communication effectiveness of financial statements during second term

1y Richard Crump, Writer
IFRS Foundation to cut board size and improve transparency

Accounting Standards IFRS Foundation to cut board size and improve transparency

2y Richard Crump, Writer
Indonesia set to achieve full IFRS convergence

Accounting Standards Indonesia set to achieve full IFRS convergence

2y Calum Fuller, Reporter
FASB publishes US leasing standard

Accounting Standards FASB publishes US leasing standard

2y Calum Fuller, Reporter