Banks Should Recognize Credit Losses Earlier, IASB Says

Banks should be required to recognize losses on credit portfolios before the assets go into default, an international accounting standards body said today.

The measures, known as the expected loss model, would mark a shift from the incurred loss model, which allows banks to wait until “financial assets are close to default,” the International Accounting Standards Board said in a report. Banks would have to recognize losses on portfolios as they deteriorate in quality, under the proposals.