Dangerous to ease accounting rules on banks’ bad debt
Confidence will be lost if lenders are allowed more flexibility around how they report doubtful loans
Measures to contain the spread of Covid-19 are upending every corner of economic life, bringing entire industries to a standstill across the world. What happens in the broader economy has a huge affect on the banks that oil its wheels. Financial regulators have — rightly — responded swiftly. The supervisors should ponder their next moves carefully, however.
It is essential to soften the blow of companies and people not being able to repay their debts, as income evaporates. Lenders will be in the front line of restarting economic activity, not least in Europe, where bankers — not the capital markets — are the principal backers of business. But a rush to ease the financiers’ pain will also mean trusting that they will not repeat the errors and misdeeds of the past...
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Subscribe now to unlock this article.
Support BusinessLIVE’s award-winning journalism for R129 per month (digital access only).
There’s never been a more important time to support independent journalism in SA. Our subscription packages now offer an ad-free experience for readers.
Cancel anytime.
Questions? Email helpdesk@businesslive.co.za or call 0860 52 52 00. Got a subscription voucher? Redeem it now.