ESBG believes IASB’s proposal regarding IAS 39/IFRS 9 would lead to an increased use of fair value where the business model does not warrant it – especially for savings banks. Furthermore, pro-cyclicality is not appropriately addressed.
ESBG fully subscribes to the need to improve the accounting rules for financial instruments but believes that the concerns of retail and savings banks are currently not taken into account.
“IASB’s proposal regarding IAS 39/IFRS 9 does not take into account the lessons we must draw from the financial crisis” said Chris De Noose, ESBG Managing Director, “there must be a balance between measuring at fair value and at amortised cost”. IASB’s proposal regarding IAS 39/IFRS 9 would lead to an increased use of fair value where the business model does not warrant it – especially for savings banks. Furthermore, pro-cyclicality is not appropriately addressed.
There are other reasons to refrain from a fast track-endorsement of IAS 39/IFRS 9. Later decisions on hedging, impairment and liabilities are still to be handled by the IASB. It is also unclear if discussions with the FASB could lead to a reversal of future decisions. “While convergence between US GAAP and IFRS is critical, solutions should not be rushed to the detriment of a mixed measurement model. Therefore, we strongly support the Commission’s decision to postpone the endorsement of the new fair value rules”, concluded Chris De Noose.
© European Savings Banks Group
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