LONDON, June 5 Britain needs separate accounting
rules for banks to allow investors and regulators to properly
evaluate risks, as trying to do so now was like trying to "pin
the tail on a boisterous donkey", a senior Bank of England
International Financial Reporting Standards (IFRS), which
set accounting methodology, give a "hit and miss" view of the
solvency of banks, Andrew Haldane wrote in this month's edition
of the accountancy and business magazine Economia.
Haldane, the Bank of England's executive director for
financial stability, said Britain's accounting rules were so
badly flawed that getting an accurate view of a bank's assets
was like trying to "pin the tail on a boisterous donkey".
He said the uncertainty brought about by the financial
crisis showed that the "flighty liabilities and uncertain
assets" of banks made for a fragile mix.
"If they are to be useful to investors, banks' financial
statements need to capture those fragilities so that risk can be
priced," he wrote.
"This calls for accounting rules that properly recognise
the special characteristics of banks' assets and liabilities.
IFRS requirements currently fall short of that objective," he