LONDON, April 25 European Union lawmakers will
fast-track rules giving banks breathing space to comply with a
new accounting standard that forces them to provision upfront
for possible defaults on loans.
The new "IFRS 9" accounting rule applies from next January,
and is likely to push down a bank's core capital ratio, a
benchmark of financial health that is closely tracked by
investors, even though the level of risk remains unchanged.
Global regulators have proposed a transition period of up to
five years for banks to build up provisioning to required levels
under the rule, but it needs to be introduced into EU law to
An EU legislative proposal is now before the European
Parliament and the bloc's member states, but approval of EU
rules can often take many months, which would leave banks having
to comply with the accounting rule in full from day one.
"We have decided to fast-track ... IFRS 9," Roberto
Gualtieri, chairman of parliament's economic affairs committee,
said on Tuesday.
Daniele Nouy, the European Central Bank's top banking
supervisor, told the committee it was important for lawmakers to
act fairly soon on the transitional measures as supervisors were
powerless to act if there is no legislation ready.
"However, it is important that the mechanism should be
simple in nature, also for the market to understand," Nouy said.
Frederic Oudea, chairman of the European Banking Federation,
an industry body, also told lawmakers that an "accelerated
agreement" was needed so as to provide the intended relief.
(Reporting by Huw Jones, editing by David Evans)