G20 accused of failing to fully monitor most important banks

 
Tim Wallace
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THE WORLD’S biggest banks are not being properly supervised, a global regulator claimed last night, arguing authorities need to step up efforts to monitor risk and manage capital levels.

The Financial Stability Board’s (FSB) update into regulatory progress found that national regulators often lack the resources to maintain a sufficient degree of scrutiny.

And the FSB also warned that statistics bodies are getting further apart on key accounting standards, rather than agreeing as planned.

In particular the US Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) are diverging on the impairment of financial assets, or provisioning – and area the FSB calls “critically important to financial stability”.

“Final IASB and FASB standards should result in improved provisioning practices that incorporate a broader range of available credit information, so as to recognise losses in loan portfolios at an earlier stage,” it noted.

But the report did praise the governments’ progress on implementing reforms to increase transparency in the over-the-counter (OTC) derivatives markets, as all FSB countries are moving towards central clearing of derivatives.