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01 april 2004

IAS 39: European Banks Welcome Talks But Stress Outstanding Issues Must Be Resolved

From: EBF-FBE

As expected, the International Accounting Standards Board (IASB) has published its Amendment to IAS 39 aiming at introducing Fair Value Hedge Accounting for a Portfolio Hedge of Interest Rate Risk on the basis of the IASB's own preferred approach. This alleviates some of the difficulties caused by the IAS 39 hedging rules, but leaves unresolved the core deposit issue and the false volatility in equity caused by cash-flow hedging.

 

The press release announcing the publication of the Amendment offers a promise of further talks with a view to improving the standard via a new Working Group that the IASB will set up shortly.


Furthermore, it is understood that the IASB plans to publish a text dealing with the Fair Value Option later this month.


In view of these developments, the European Banking Federation (FBE)


Welcomes IASB's announcement that it intends to set up an international Working Party to examine the fundamentals of IAS 39 with a view to replacing the standard "in due course". This is clearly something that banks will want to explore with the IASB.


Underlines that there is a strong view within the European Banking Industry -

confirmed by the FBE Board - that the fundamental issues raised by IAS 39 should be resolved before it becomes obligatory within Europe.


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

w.wilms@fbe.be


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

f.ranson@fbe.be

 
 
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