The European Securities and Markets Authority (ESMA) has found that Greek issuers are felling short of meeting IFRS disclosure requirements in relation to the country’s sovereign debt.
IFRS disclosure was particularly poor in relation to transparency of gross exposure, maturities, valuation methodologies and the impact of impairment on profit or loss, according to ESMA.
The watchdog also raised concerns over the level of clarity and transparency over credit default swaps and whether issuers were buyers or sellers of these instruments.
The ESMA review highlighted a lower level of transparency regarding Greek government bonds that had been reclassified as well as exposures to Greek non-sovereign debt.
ESMA chair Steven Maijoor said that although the report only covers the accounting treatment of Greek sovereign debt, its principles “should be applied to any material exposures to financial instruments that become subject to enhanced risk.”
Maijoor added that this can contribute to the protection of investors and promote stable markets.
ESMA reviewed 42 European financial institutions: 21 banks, five insurers and 16 combined banking and insurance institutions.