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Norris - european banks slippery standards

Norris - european banks slippery standards - September 8...

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September 8, 2011 Many Views on a Greek Bond’s Valu e By FLOYD NORRIS Is there one set of international accounting standards, or can each country choose its own when the going gets tough? That is the important issue being sorted out now in Europe, where banks have taken widely divergent positions on valuations of Greek bonds. Broadly speaking, there seems to be a consensus within countries. British banks were most willing to swallow bad medicine and admit the bonds were worth far less than par value. Some German banks were equally forthcoming, but others were less so. Italian banks seem to have done as little as they could, but did take write-downs. French banks went the farthest to find ways to act as if Greek bonds were just fine. The first-half financial statements issued by the banks were unaudited, but they were reviewed by audit firms. The same firms well, firms with the same name seem to have signed off on wildly different ways of looking at the same underlying market for Greek bonds. In some cases there is enough disclosure for investors to try to adjust valuations, but in other cases there is not. The situation is so chaotic that the chairman of the International Accounting Standards Board, Hans Hoogervoorst, wrote to European securities regulators in early August to protest that “it appears that some companies are not following” the relevant accounting rule, known as IAS 39. He did not name names, but there was no doubt he had the French banks in mind. The protest which was kept secret until someone leaked it to The Financial Times has so far provoked no public response from the regulators. It is the French securities regulator, the Autorité des Marchés Financiers , whose reaction will matter most. If it forces French banks to change their
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accounting, it risks incurring the wrath of both the French government and French bank regulators. If it looks the other way and other European
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