Most EU financial institutions have not reclassified assets
08 Jan 2009
A study by the Committee of European Securities Regulators (CESR) has found that many banks in the European Union have chosen, up to now, not to use the option that the IASB added to IAS 39 in October 2008 to permit reclassification of some financial instruments out of the fair-value-through-profit-or-loss and available-for-sale categories.
CESR reviewed the application of the reclassification amendment by financial institutions within the EU in their third quarter interim financial statements and interim management statements. CESR's analysis covered all 22 financial institutions in the FTSE Eurotop 100 index and 78 other financial institutions. The 100 companies are based in 21 EU member states. CESR found:
CESR's report also responds to a request from the European Commission for CESR's views on accounting issues in addition to reclassification:
|
- Fair value option. CESR believes that 'there is a need to examine the effects of the use of the fair value option in more detail within a short timeframe', including whether reclassification should be permitted for financial assets measured using the fair value option.
- Embedded derivatives. CESR welcomes the IASB's recent ED on amendments to IFRIC 9 and IAS 39 and encourages the IASB and the FASB to work together to assess whether further clarification is needed relating to embedded derivatives. 'Furthermore, CESR would recommend that the IASB provides guidance on the main types of synthetic structures covered and on which factors are important for issuers in determining whether an embedded derivative exists and if so, whether it should be measured separately. This clarification should also state that embedded financial guarantee-types do not need to be separated out.'
- Impairment of available-for-sale items. CESR recommends the IASB examines the issues surrounding impairment for available for sale financial instruments.
