The Greek sovereign debt crisis has caused
large discrepancies in the 2011 statements of EU regulated
financial institutions, according to a survey by the European
Securities and Markets Authority (ESMA).

ESMA found that in the statements there are
differences regarding recognition or non-recognition of impairment
losses derived from the Greek debt crisis, with two financial
institutions out of 23, which had decided not to participate in the
July International Institute of Finance plan, did not recognise any

Another difference relates to bonds with
maturities after July 2020, for which some financial institutions
indicated recognition of impairment losses and some did not.

Regarding bonds classified as held to
maturity, 10 out of 23 financial institutions with investments in
this category used the estimation of the 21% “haircut” on the face
value of the bonds, while one bank used the original effective
interest rate resulting in impairment losses between 17% and

To help issuers with their upcoming year
financial statement, ESMA has issued an advisory document,
stressing the assessment of objective evidence that a financial
asset is impaired should be based on criteria such as financial
difficulty of the obligor, breach of contract, concession granted
to the borrower, disappearance of an active market or decrease in
the estimated future cash flows.

But credit downgrade should not be considered,
of itself, evidence of impairment, nor a decline in the
instrument’s fair value.

The document also reminds issuers that
according to existing IFRSs, sovereign debt classified as held to
maturity or loans and receivables are measured at amortised cost
using the effective interest rate method. While sovereign debt
classified as available-for-sale or held for trading is recognised
in the statement of financial position at fair value.