European Banks Get New Capital Hit From Accounting Rule
This article is for subscribers only.
European banks already under pressure to strengthen capital ratios may have to hold off on distributing profit to shareholders because of new accounting rules on how loan losses are calculated.
The accounting requirement under the International Financial Reporting Standards, which goes into effect in 2018, would lower European banks’ capital levels by an average 2.7 percentage points, according to a study published Sept. 11 by Standard & Poor’s. That’s based on a survey showing banks expect their loan-loss reserves to rise by 50 percent, S&P said.