EU approval for bank loans provisioning rule coming soon, says IASB
Hans Hoogervorst, Chairman of the International Accounting Standards Board (IASB), has said that the EU will soon approve a delayed accounting rule forcing banks to book losses on loans much earlier than they do at the moment.
The International Accounting Standards Board (IASB) has written the "IFRS9" rule and the EU must endorse it in order for it to become mandatory across the 28 member states.
IFRS9 will mean banks have to set aside some money on the first day of a loan from 2018, whereas at the moment under current rules, banks only need to make provisions near or at the point of default.
The new arrangements are seen as a vital lesson learnt from the banking crisis and a decade on from the crash of Lehman Brothers bank.
The IASB Chairman said at an Institute of Chartered Accountants in England and Wales (ICAEW) accounting conference: "I expect that at least for the banking sector, there will be a very clear yes very shortly."
Hoogervorst added that insurers could be exempted initially until a separate accounting rule for contracts is agreed.
Hoogervorst, the former Dutch finance minister and securities regulator who is coming to the end of his first five-year term as IASB chairman, said that his core aim was for the body to become a "listening organisation."
He said the IASB would now focus on "cleaning up" existing rules after an intensive period of making new ones, rather than start working on another new series of major standards for the industry.