Regulatory changes good news for investors
Forthcoming changes in the accounting practices of banks, imposed by regulators through Basel II and International Financial Reporting Standards (IFRS), will “make balance sheets speak up", according to Jean-Bernard Caen, group capital manager at Belgian bank Dexia, speaking at Risk ’s annual Risk Europe conference yesterday.
The changes will be good news for investors, whose ability to judge future cashflows will be improved by the changes, he added. He said the changes will make it harder for capital losses to be hidden, and easier to identify "mummified assets and liabilities".
Caen denied that IAS 39, the new IFRS standard relating to derivatives, will have a negative impact on shareholder value through fostering risk aversion in company boards. The changes will allow top management to make better decisions by identifying and taking on the right risks, he said.
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