Some European financial institutions should have taken bigger losses on their Greek government bond holdings in recent results announcements, according to the body that sets their accounting rules.

In a letter sent to the European Securities and Markets Authority, the European Union’s market regulator, the International Accounting Standards Board criticised the inconsistent way in which banks and insurers have been writing down the value of their Greek sovereign debt.

“This is a matter of great concern to us,” Hans Hoogervorst, IASB chairman, said in the letter, which was published on Tuesday after the IASB’s concerns were revealed by the Financial Times.

People familiar with the IASB’s thinking said the intervention was unprecedented and reflected its belief that some European companies had not been making enough provisions for Greek sovereign debt losses.

Financial institutions have slashed billions of euros from the value of their Greek government bond holdings following the country’s second bail-out. The extent to which Greek sovereign debt losses were acknowledged has varied, with some banks and insurers writing down their holdings by a half and others by only a fifth.

The letter did not single out particular countries or banks. But according to one person familiar with the correspondence, it reflected concern at the approach taken by BNP Paribas and CNP Assurances.

The French bank and insurer both announced 21 per cent writedowns, as envisaged by last month’s Greek bail-out. They argued there were no reliable market prices to guide a “fair value” for Greek government debt because of their illiquidity and instead used a “mark to model” valuation. Banks and insurers that used market prices suffered a bigger hit. Royal Bank of Scotland wiped £733m from the value of a £1.45bn Greek government bond portfolio – a 51 per cent cut.

Mr Hoogervorst challenged the justification for a “mark to model” approach and also the valuations these produced. “Although the level of trading activity in Greek government bonds has decreased, transactions are still taking place,” he said. “It is hard to imagine that there are buyers willing to buy those bonds at the prices indicated …it is therefore difficult to justify that those models would meet the objective of a fair-value measurement.”

The IASB and ESMA declined to comment, as did BNP Paribas and CNP Assurances.

Separately, EU officials insisted on Monday that bank capitalisation levels were adequate. “EU banks are significantly better capitalised now than they were one year ago,” said Olli Rehn, the European Commission’s economic chief.

Additional reporting by Peter Spiegel in Brussels

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