EU approves diluted IAS39 rule
A carved up version of controversial standard IAS39 has been approved by the European Commission, despite consistent attempts to avoid diluting the new rule.
The EU’s accounting regulatory committee, made up of representatives of 25 member states, voted in Brussels by qualified majority to recommend endorsement of IAS39 for use in Europe, with two modifications.
The amendments restrict banks? use of the IAS39 fair value option as it applies to liabilities and also allows the use of fair value hedge accounting for banks’ interest rate hedges of core deposits on a portfolio basis.
Member states can decide to impose the full IAS39 without modifications.
Some industry figures have suggested that the partial adoption could damage longstanding efforts to converge international and US accounting standards. The news will be seen as a victory by some European banks, notably in France, that have lobbied for changes to IAS39 because they claim it could disrupt their risk management practices.