Impact of IFRSs on European bank regulatory capital
10 Mar 2006
A study by the Committee of European Banking Supervisors (CEBS) has found that the guidelines that it published in December 2004 for adjustments to IFRS financial data reported by European banks for the purpose of determining banks' 'own funds' (equity capital for regulatory purposes) have satisfactorily addressed concerns of bank supervisors.
Supervisors were concerned that the introduction of IFRSs might:
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- "Jeopardise the criteria that regulatory own funds have to fulfil, namely that they be (i) permanent, (ii) readily available for absorbing losses, and (iii) reliable as to their amounts."
- "Introduce volatility into institutions' financial statements and, more particularly, into regulatory own funds, in ways which might not reflect the economic substance of institutions' financial positions."
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