Dimitris Kontogiannis’s piece yesterday on banks’ apparent attempt to shift the cost of their unfunded pension liabilities onto the taxpayer («Pension reform pressing») is interesting and raises the following question in my mind. If the banks could persuade the government/IKA to take on the liability, has anybody asked the question of whether this would be legal? Since under IFRS the liabilities are real obligations, it seems to me that even if a collective liability of (say) xx billion euros were to be «moved» to IKA so that it disappeared from the banks’ balance sheets, this would amount to a state subsidy to the banks of the same xx billion euros. Although I am not an expert in EU trade law, I suspect that this could well be an illegal subsidy under EU competition rules – in which case the banks are going to have to «take the hit» to their balance sheets. By the way, this is a great illustration of the benefits of IFRS adoption. If banks have been pretending that these liabilities do not exist, the losers will be the employees and future pensioners who will receive nothing when the pension fund goes bankrupt and the banks themselves default; or depositors, if a bank itself goes bankrupt. It is better for all concerned if the liabilities are understood, rather than «bury heads in the sand» and pretend that the liabilities do not exist. Of course, the same could be said about state pension liabilities. For this reason I think that IFRS adoption for state-controlled enterprises would also be a good thing. Has anyone come up with estimates of the actuarial valuation of these liabilities and the overall pension fund shortfall? It is quite possible that the liabilities will be very large in relation to bank capital. PETER F. POPE, Professor of Accounting and Finance, Lancaster University, UK.