Big variations in how major European Union banks do their accounts can leave investors guessing over their financial health and could also undermine financial stability, a top regulator said on Monday.
Banks' accounting practices have come under regulatory scrutiny following the financial crisis when a number of banks, whose accounts showed they were healthy, had to be rescued by taxpayers.
Policymakers are now trying to restore confidence in banks after the crisis so they can obtain more funding from investors rather than having to rely on central bank money.
Steven Maijoor, chairman of the European Securities and Markets Authority (ESMA), said a review of 39 unnamed major banks showed some improvements in accounting but that accompanying disclosures sometimes contradicted the main figures.
"Our general line is there should be more tailor-made disclosures to increase investor confidence in these banks," Maijoor told reporters.
Too often there was insufficient information on how a bank uses derivatives, instruments blamed for compounding the crisis, the ESMA study said.
Banks and their accountants are about to start preparing annual statements for 2013 according to mandatory book-keeping rules known as IFRS.
