Market players foresee complications, especially for the banks that tend to overestimate the equity.
Photo: Dmitry Lekay
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CBR Adds International Standard to Accounting
The Central Bank of Russia adds some methods of International Accounting Standards (IAS) to the accounting procedures used by the banks in Russia. The basic novelty is the required application of IAS 39th standard, including in part of the fair value assessment.
The Central Bank of Russia released via the web-site yesterday its draft ruling amending the accounting procedures for credit organizations. In particular, CBR is willing to introduce the 39th standard of IAS, including the fair value assessment. In other words, the bank authority of Russia suggests evaluating the assets not by their balance value but by the value existing on date of making out the accounting report.
The reasons of such novelty are clear. Past fall, CBR Deputy Chairman Tatyana Paramonova publicly compared the reports made out under the IAS and RAS. 2004 capitalization of 60 percent of the banks was lower under IAS than under the Russian Accounting Standards (RAS) with the gap standing at 20 percent on average.
CBR declined to comment on the draft, while the market players foresee complications, especially for the banks that tend to overestimate the equity.
The capitalization of Russian banks is bound to drop once the new regulations come in force. Compared with RAS, indicators of the banks go down in 99 percent cases if the fair value method is applied, said Sergey Nazarov, who heads a department at Absolut Bank. Adding this standard to RAS will enable the CBR to take supervisory actions to banks, which stock capital and/or some other indicators don’t match the required standards.
www.kommersant.com
All the Article in Russian as of Aug. 29, 2006
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