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11 june 2004

European Banks Request Progress on IAS 39 Before Endorsement

FBE press release

European Banks Request Progress on IAS 39 Before Endorsement In a letter sent today to Commissioner Bolkestein, as well as to the heads of the International Accounting Standards Board (IASB), the Basel Committee, the Committee for European Securities Regulators (CESR) and the European Central Bank, the European Banking Federation (FBE) requests further progress be made on IAS 39 before the EU takes a decision on its endorsement.


The European banking industry is clearly committed to the application of IAS to listed companies in Europe. However, it believes that the gain from the strengthening of the European capital markets resulting from the application of international accounting standards can only be achieved if Europe ensures that the standards developed by the IASB are suited to European market conditions.

IAS should ensure that financial statements presented according to its standards provide a management view of the performance of a company when measured against its business objectives. The FBE emphasizes, in particular, that IAS 39 hedging rules are not in line with the underlying objectives of risk management. "We see it as a prerequisite for endorsement that satisfactory progress must be made towards a straightforward hedging model that provides a clear means of hedging risk arising from the core deposit base and a simpler means of judging effectiveness" declared Daniel Bouton, CEO of Société Générale and FBE representative in the High Level European Advisory Group, established by the IASB.

There is hope for achieving a satisfactory solution on the issue of improving the balance sheet presentation, European banks insist, however, that presentation cannot be solved independently from substance. "The present IAS 39 hedging rules are not satisfactory and should be amended before the EU can consider endorsing IAS 39. Otherwise it cannot be considered as providing a fair and truthful information on the financial situation of companies that will use it, especially in the case of financial institutions" adds Maurizio Sella, President of FBE. Banks are already discussing with the IASB a proposal from the FBE which intends to bring substantial improvements to the IAS 39 hedging rules.

THE FBE considers that, as the IASB will already be "tidying up" issues such as the respect of the fair value option and other aspects of IAS 39 in the coming months, addressing the other issues identified by the banking industry should not significantly stretch the time needed to conclude this work, while it would show good will and would allow banks to engage constructively in the dialogue about further improvements to IAS, including IAS 39, within a medium term context.

Note to Editors

Set up in 1960, the European Banking Federation (FBE) is the voice of the European banking sector. It represents the interests of over 4,000 banks from the 15 EU Member States as well as Hungary, Iceland, Norway and Switzerland, with over 2 million employees and total assets of 20,000 billion euros.

Contact persons

Nikolaus Bömcke, Secretary General 32 (0)2 508 37 26

Wilfried Wilms, Adviser 32 (0)2 508 37 62


Florence Ranson, Communications Adviser 32 (0)2 508 37 34


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