EU backs change to bank accountancy rules
A EU regulators’ committee in Brussels has voted unanimously to accept emergency changes made by the International Accounting Standards Board (ISAB).
The ISAB amendments provide banks more leeway in how they value certain assets whose prices have dropped substantially.
Under the rule change financial institutions can reclassify certain instruments, moving them from their trading books to their banking books.
This means that any further falls in market prices would not have to be reported, with any gains spread over the lifetime of the assets.
Banks can opt in or out of the changes, which have taken affect immediately, meaning that banks can apply them to their third quarter results this year.
The IASB changes followed heavy pressure from European banks and politicians to give financial institutions increased flexibility to help them deal with the current financial climate.
