Proposals on balance-sheet netting spark worries about leverage ratios

The Financial Accounting Standards Board and the International Accounting Standards Board jointly proposed in January to align their rules on balance-sheet netting. The proposals would mean US banks have to report derivatives assets and liabilities on a gross basis – a move that could hit leverage ratios hard. By Mark Pengelly

Politicians and regulators have been calling for a globally consistent set of accounting standards since the onset of the financial crisis. So far, however, progress has been slow, with disagreement between standard setters on a range of core issues. Now, the Connecticut-based Financial Accounting Standards Board (FASB) and London-based International Accounting Standards Board (IASB) are showing signs of pulling in the same direction. Unfortunately for many market participants, it is not the