EU aims at accounting convergence with US

PRAGUE: European Union ministers said it is ���critical��� that convergence on accounting standards is reached on the continent to ensure that the region���s banks are not placed at a disadvantage against US competitors.

The International Accounting Standards Board, which writes the rules used in Europe, must cooperate with the US Financial Accounting Standards Board, the ministers said in a statement on Sunday, following a meeting of European finance ministers and central bankers in Prague. A goal is to avoid ���competitive distortions,��� they said.

European lenders may face a disadvantage without changes to mark-to-market rules similar to those decided by the US on April 2. The US move stands to help banks such as Citigroup report higher profits by easing requirements to recognise fluctuations in the value of investments.

Critics of the fair-value rule say it hurts banks by forcing them to book paper losses in the midst of the crisis. ���If it was up to me to decide, I would just download the US text with Google and adopt it with a European blessing,��� Italy���s finance minister Giulio Tremonti said.

German finance minister Peer Steinbrueck said he wants similar accounting principles in Europe as in the US.
European countries are under more pressure to achieve concrete progress on regulation. Ministers noted ���the critical importance of converging accounting standards at a global level��� as well as ���ensuring adequate transparency of banks��� financial situation is key to restoring confidence in financial markets.���

���The US has already taken the lead on accounting standards, with the recent FASB decisions on mark-to-market which lifted investors��� sentiment,��� Marco Annunziata, chief economist of UniCredit Group said. ���If the EU wants to play a guiding role on the issues it claims are most important, it will need to accelerate its decision process.���

���We need to arrive at a level playing field on this matter,��� French Finance Minister Christine Lagarde told reporters. ���We need to stress to the IASB the urgency to examine accounting principles, in particular those concerning the valuation of illiquid assets.���