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UK banks agree to simplify future accounts

The British Bankers Association has confirmed that UK banks have all agreed to abide by simpler accounting methods in the future as a means of comparing like-for-like across the UK financial and banking sector. This comes after severe criticism of UK bank report and accounts, many of which seemed to treat similar assets in a different manner. During these difficult economic times this made it near impossible to compare like-for-like using published report and accounts, thereby placing many investors and regulators in the "dark".

The Financial Services Authority (FSA) has confirmed its agreement with the British Bankers Association new code of practice although a discussion paper has been launched to confirm and clarify whether the changes do actually go far enough. For many years there have been problems with regards to off balance sheet debt and other issues which made it very difficult and time-consuming to get to the bottom of a bank's debt position and investment position.

The proposed change in the accounting methods would appear to go hand-in-hand with the so called "living wills" announced just a few days ago. All of these different procedures and changes are coming together to try and simplify the UK banking system and eliminate, or reduced as much as possible, the chances of a major credit crunch happening in the foreseeable future.

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