Brussels is being asked by the EU’s top regulator to make urgent changes to accounting rules to give European banks more flexibility over the way they treat certain assets.

Charlie McCreevy, internal markets commissioner, told the European parliament: “We are urgently putting forward changes to our accounting rules to ensure banks in the EU can avail of the same flexibility that is offered to banks in the US – namely, this will provide the option for individual banks if they want to move assets from their trading books to their banking books”.

Mr McCreevy said he hoped the parliament would support the measure as a “matter of urgency” and suggested that, in the meantime, national supervisors should apply the measure at local country level so that banks could make use of it in preparing their third quarter results. It will permit banks to value illiquid assets nearer to the purchase price than the current price, thus easing pressure on their balance sheets.

He also noted the International Accounting Standard Board’s acceptance of the US’s recent guidance that American banks do not need to mark illiquid assets to hard-to-determine market prices. “This is also highly relevant for banks and should be used for third quarter reporting,” he said.

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