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FSA Prepares To Bridge Gap Between Basel II & IFRS

The Financial Services Authority is preparing a consultation paper to discuss how International Financial Reporting Standards will affect capital measures, as set out by the Basel II accord.

The Financial Services Authority is preparing a consultation paper to discuss how International Financial Reporting Standards will affect capital measures, as set out by the Basel II accord. Thaddeus Nyahasha, policy advisor in the prudential standards division, said it will publish a consultation paper next month.

ISDA members raised concerns that local regulators implementing Basel II are not working with accounting officials to clarify accounting treatment of capital. "There's a playoff between IFRS and Basel II going on at the moment," said Bridget Gandy, head of international accounting research at Fitch Ratings in London. This means the format of accounts for European banks is still unclear and it is difficult for analysts to know how to approach this because they can't see anything yet, she noted. "We definitely welcome [the FSA consultation paper] and we would like to see that in all countries," she added.

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