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European Banks 'may Have Inflated Balance Sheets Over Greek Debt'

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The International Accounting Standards Board has said European banks may have inflated their balance sheets and profit and loss accounts by not taking full writedowns on distressed Greek debt.

In a highly unusual intervention, the IASB on Tuesday published a letter from chairman Hans Hoogervorst to the European Securities and Markets Authority saying that some banks were using models to mark down the value of Greek assets, where market valuations existed.

When accounting for trading assets, banks are required under International Accounting Standard 39 to use arm's-length values taken from actual transaction prices to value the assets on their books. Where trading is very illiquid and market valuations cannot be obtained, they can then use valuation models using internal estimates of value.

"There have been indications in the market that some European companies are applying the accounting requirements for fair value measurement and impairment losses in a way that seems to differ from the objective of [accounting standards]. This is evident particularly in their accounting for distressed sovereign debt, including Greek government bonds. Those indications have now been confirmed by recently published financial reports, which show inconsistent application across Europe. This is a matter of great concern to us," Hoogervorst said in the letter.

Still I'm sure this won't be a problem...

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The news reference Greece and its debt mountain has gone pretty quiet these last few weeks!!!

Either all the hacks ect were away on their holidays or Greece was!!!

Wonder if they have cut their standing armed forces back from the 300,000 odd they were?

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The IASB is responsible for setting accounting standards but not for enforcing them.

Don't tell me - that'll be the "regulators" job :lol::lol:

Financial farce (if it weren't so serious).

Edited by billybong

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Yep, Mark to Fantasy accounting has been rampant in Europe since 2008.

But surely the Oscar goes to Spanish banks wrt their property loans books.

Edited by Deckard

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  • 336 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?

      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%

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