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European Union

EU Banking Sector Faces Accounting Standard Deadline

Strategic Insights

— 1 min read

The EU's 7,000 listed companies, including 3,000 from the UK, must comply with International Accounting Standards (IAS) from 1 January 2005, with the International Accounting Standards Board (IASB) confident that market forces will drive adoption of a controversial banking standard. The vice-chairman of the IASB, Tom Jones, believes investors will pressure banks to apply the standard in full, despite some EU member states expressing concerns about its potential impact on bank share prices. The IASB is provisionally backing the standard, but with exemptions for the banking sector, pending a formal vote in October.

Key Takeaways:

  • The EU's 7,000 listed companies, including 3,000 from the UK, must comply with International Accounting Standards (IAS) from 1 January 2005.
  • The International Accounting Standards Board (IASB) is confident that market forces will drive adoption of the controversial banking standard, IAS39.
  • The IASB has provisionally backed IAS39, but with exemptions for the banking sector, pending a formal vote in October.
  • Tom Jones, the IASB's vice-chairman, believes investors will pressure banks to apply the standard in full due to potential losses from excluding certain risks in balance sheets.
  • Jones regrets the potential for incomplete application of the standard, citing the importance of companies preparing for the change.
  • Approximately 45% (3,000 out of 7,000) of EU listed companies are from the UK and have been using IAS for years.

Statistics:

  • 7,000 listed companies across the European Union must comply with International Accounting Standards (IAS) from 1 January 2005.
  • 3,000 of these companies are from the UK, representing approximately 45% of the total.
  • IAS39 is the controversial banking standard in question for the EU's listed companies.
  • The IASB is provisionally backing IAS39, but with exemptions for the banking sector, pending a formal vote in October.
  • The European Parliament's economic and monetary affairs committee will grill IASB chairman Sir David Tweedie on 22 September.

Sources:

  • European Voice

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