European banks call for urgent oversight reform

BRUSSELS (Reuters) - Retail deposits in the European Union are generally protected but a coordinated approach to industry supervision is urgently needed, the European Banking Federation said on Tuesday.

"The EBF stresses that in EU countries generally speaking, retail deposits are insured," the federation said in a statement on the financial crisis.

Ireland guaranteed all bank deposits on Tuesday in a bid to improve the industry's access to international funds frozen by the credit crunch.

The EBF also welcomed recent moves by regulators to clamp down on short-selling that helped to send financial shares lower.

"A coordinated supervisory approach is what is called for urgently," the EBF said.

The industry lobby blamed the so-called fair-value accounting standard that all banks listed in the EU must use for exacerbating the difficulties faced by some European banks.

Fair value refers to periodic revaluing of assets according to their latest market price when filing earnings reports.

There have been dramatic falls in the value of some assets during the financial crisis, creating huge paper losses.

"As a matter of priority, the EBF envisages to use accounting standard setters to amend the rules on reclassifications, that is on transfers from the trading book, which are measured at fair value, to other categories of assets," the EBF said.