Proposed changes to European banking regulations

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15 Jul 2009

Some aspects of the European Commission's revisions to the Directive on capital requirements for financial institutions may have financial reporting implications.

Among other things the proposal calls for enhanced public disclosures about the level of risks to which banks are exposed in securitisations in both their trading and non-trading portfolios. It would also make clear that the provisions on prudent valuation in the existing Directives should apply to all instruments measured at fair value, whether in the trading book or non-trading book of institutions. The proposal acknowledges that there may be differences in fair value measurements for accounting and regulatory purposes: "Where the application of prudent valuation would lead to a lower carrying value than actually recognised in the accounting, the absolute value of the difference should be deducted from own funds." EU member states would be expected to adopt the new requirements by the end of 2010. Click to download:


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