Sunday, April 19, 2009

IFRS vs US-GAAP: European Banks Leverage Overstated

This picture, posted by Alea, shows the difference in the value of “total assets” depending on whether IFRS or US-GAAP is used. IFRS deals with gross exposures, while under GAAP, derivatives are represented at their net value. It shows that using the IFRS standard yields vastly higher leverage ratios than under US-GAAP.

It's taken from a Deutsche Bank investors presentation, which also has losts of other IFRS versus GAAP analysis.


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