No change to deferred tax assets by ECB
The European Central Bank’s Single Supervisory Mechanism (SSM) are not about to make changes to the status of the deferred tax assets of Greek banks, sources from which said SSM officials had informed the lenders’ managements that no change is being planned.
That is why local banks recently assured foreign investors in information given to the latter on the occasion of the issue of first-quarter financial results that there were no worries about a shift in this crucial aspect of their capital base.
The ECB has accepted and acknowledged that part of banks’ deferred tax obligations can be used as capital that can be added to the sum used for the calculation of capital adequacy indices. This followed a law aimed at strengthening the lenders’ financial reports, mirroring the situation in Italy, Spain and Portugal.
The creation of deferred tax assets is an accounting practice allowing companies to postpone the payment of tax to the state from a loss-making year to a profit-making one, in effect offsetting losses with profits. The law allowed banks to classify the taxes they did not have to pay due to their losses from the debt restructuring (PSI) as capital.
