March 25, 2020 / 7:54 AM / 10 days ago

EU watchdog says banks have flexibility over loan loss rule

LONDON, March 25 (Reuters) - A global accounting rule that requires banks to provision for souring loans has enough flexibility to reflect the circumstances of the coronavirus, the European Union’s securities watchdog said on Wednesday.

Banks have warned they face mounting provisions as businesses they lent money to struggle to repay loans during the outbreak.

“In ESMA’s view, the principles-based nature of IFRS 9 includes sufficient flexibility to faithfully reflect the specific circumstances of the COVID-19 outbreak and the associated public policy measures,” the European Securities and Markets Authority said in a statement. (Reporting by Huw Jones, editing by Louise Heavens)

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