LONDON Jan 4 A top banking supervisor has
listed minimum requirements it wants to be used by banks making
provisions for bad debt, in a letter to accounting industry
rule-setters struggling to agree new global standards.
World leaders called in April 2009 for a single set of
global accounting rules to improve transparency and force banks
to make provisions early enough so as not to have to be bailed
out by taxpayers in a financial crisis.
The International Accounting Standards Board, whose rules
are used in over 100 countries, and U.S. Financial Accounting
Standards Board have been trying to forge those new rules but
have failed to find common ground on bad debt provisions.
"We are concerned ... the boards may not reach convergence
given the FASB's recent decision to pursue an impairment model
that differs from the IASB's model," the Basel Committee on
Banking Supervision said in the letter, dated Dec. 21 and made
public on Friday.
The comment marked an escalation of pressure on the two
accounting boards who have repeatedly failed to meet deadlines
set by the group of 20 leading economies (G20) for common rules.
The Basel Committee also said that what the boards do agree
may not pass muster.
"While the boards have made significant progress in
developing expected loss models, we also remain concerned as to
whether the eventual standards will result in the early and
timely build-up of sufficient levels of credit allowances."