21 December 2004

CEBS guidelines on prudential filters for regulatory capital

From the beginning of 2005 European listed companies, at the minimum, will have to publish consolidated financial statements based on the new International Financial Reporting Standards (IFRS) rules. In response to a request from the Banking Advisory Committee, CEBS has proposed its first set of technical advice to the European Commission on the use of prudential filters in the context of the new IFRS rules and the Recasting Directive 2000/12/EC (Capital Requirements Directive), applicable 1st January 2007 onwards.

CEBS has further developed the filters and the final advice may be considered by the European Commission at a later stage for incorporation into the Capital Requirements Directive via the appropriate legislative procedure and following the required prior call for advice by the Banking Advisory Committee and full industry consultation.

In the meantime, CEBS has agreed to adopt the guidelines on prudential filters that will be applied on a best efforts basis by national supervisors to institutions which use IFRS for their prudential returns. The guidelines will be implemented in accordance with national procedures, and CEBS will monitor the application thereof. For consistency purposes national authorities may consider the need to apply the guidelines to institutions following national GAAP to the extent that they are similar to IFRS.

As IFRS will come into force on 1st January 2005, CEBS is not in a position to undertake a public consultation. However, national competent authorities have been asked to undertake a consultation in their country.

In order to reach a common level playing field across Europe and G10 countries CEBS proposals are, on purpose, in line with the Basel Committee’s work on the same subject.

Press release
Prudential filters

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