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HomeImpact assessment study on the most important differences between accounting standards used by banks in the banking union
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This study provides the European Commission (Directorate-General for Financial Stability, Financial Services and Capital Markets Union, DG FISMA) with an overview of the differences between national accounting standards (nGAAP) for credit institutions and the International Financial Reporting Standards (IFRS) framework, and an analysis of the potential impacts of those differences on prudential ratios. The study first analyses in detail how national accounting standards for credit institutions differ from the IFRS in ten of the nineteen Member States participating in the European Banking Union, which are those where banks are allowed to prepare financial statements using nGAAP. The study further collects data on the number and size of banks in these Member States reporting under nGAAP and the portion of banking assets accounted for under nGAAP. It analyses for three participating Member States (Austria, Belgium and Germany) whether and how these accounting standards could cause a material difference to four prudential ratios. difference to four prudential ratios. The study concludes that: Member States’ use of options to extend the scope of IFRS to banks has resulted in very wide use of IFRS within the European Banking Union. Banks that use nGAAP for their financial statements are mostly small local retail banks. In nearly all participating Member States, the proportion of total banking assets reported under nGAAP is less than 5% of the total banking assets, with the exception of Germany (52.1%) and Austria (22.7%). Differences between nGAAP and IFRS can have particularly relevant impacts on accounting for financial instruments and credit risk provisions. Many national accounting standards do not allow the recognition of fair value gains on financial instruments and base the credit risk provisions only on losses already incurred. Even where differences in accounting recognition and measurement are significant, the case studies for typical nGAAP banks in Austria, Belgium, and Germany show that the overall impact on prudential ratios is limited. Moreover, either national accounting frameworks often already have other provisions, such as general credit risk provisioning, that limit the impacts of accounting differences in practice or they are aligning nGAAP with IFRS.
- Publicado em:
- Temas: Economia ― Finanças
- Tema: atividade bancária , contabilidade , estudo de impacto , instituição de crédito , sistema normalizado de contabilidade , união bancária da UE
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| ISSN | ISBN 978-92-76-10993-8 | DOI 10.2874/664751 | Número de catálogo EV-04-19-591-EN-N |
- Released on EU publications website:
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