Banking Operations

Dáil Éireann Debate, Tuesday - 20 June 2017

Tuesday, 20 June 2017

Ceisteanna (230)

Catherine Murphy

Ceist:

230. Deputy Catherine Murphy asked the Minister for Finance further to Parliamentary Question No. 100 of 24 May 2017, if his attention has been drawn to the fact that a bank (details supplied) appears to have changed its interpretation of IAS 39, a standard which was heavily criticised during the recent bank inquiry but was nevertheless used by to hide losses in the past; if the bank has since corrected its interpretation of IAS 39 in order that in the forthcoming prospectus the bank will never value assets at above the value the bank expects to recover; the date the bank altered its views on IAS 39; if his attention has been further drawn to the fact that similar attempts by a bank (details supplied) to exploit IAS 39 resulted in a lengthy court battle which cost the bank £100 million in legal fees and resulted in the bank paying substantial compensation to shareholders; and if he will make a statement on the matter. [26922/17]

Freagraí scríofa

Minister for Finance

As I stated in response to the Deputy's previous PQ, I have no role in the day-to-day management or financial reporting of any bank in which the State is a shareholder. The financial reporting obligations, accounting practices and publication of financial results are matters solely for the Board and Management of each institution. The International Accounting Standard that the deputy's question refers to was released by the International Accountancy Standards Board (IASB) and is adopted across the EU and internationally. AIB produces detailed, externally audited accounts in line with international accounting best practice.

AIB have provided the following comment:

"AIB Financial Accounts are prepared in accordance with International Accounting Standards and International Financial Reporting Standards (collectively “IFRSs”).

Accordingly, IAS 39 Financial Instruments: Recognition and Measurement, is applicable and this policy ensures that provisions are made for impairment of financial assets to reflect the losses inherent in those assets at a reporting date (the incurred loss model). Where there is objective evidence that a financial asset is impaired (the discounted future cash flow from the financial asset is lower than its carrying value), a provision is raised.

AIB has not changed its interpretation of IAS39 and has applied it consistently."

I have no responsibility for the second bank referred to by the Deputy in her question. That bank is regulated in a foreign jurisdiction. I cannot therefore comment on its affairs.