The look ahead: European leaders to discuss bank bonuses

European Union lawmakers are scheduled to meet May 23rd for a first round of talks to negotiate over a proposed law that would ban banks from paying bonuses stemming from profits tied to cheap European Central Bank loans.

The proposed law is part of an overhaul of rules agreed on by the Basel Committee on Banking Supervision following the 2008 collapse of Lehman Brothers. Lawmakers and governments in the 27-nation EU have until January to implement the overhaul.

The rules would more than triple reserves that lenders must maintain to protect themselves from risk. The proposal also seeks to force banks to hold a minimum amount of easy-to-sell assets to survive a credit squeeze, Bloomberg reports.

Changes ahead for US private companies?

The much-debated future of private company financial reporting in the US could be decided next week.

The Financial Accounting Foundation (FAF) Board of Trustees is expected to vote May 23rd on a structure for private company standard setting.

FAF President and CEO Terri Polley told a meeting of small business and private company advisers to the Financial Accounting Standards Board (FASB) earlier this month that she plans to brief FAF trustees on constituents’ reaction to a proposal to create a Private Company Standards Improvement Council (PCSIC) whose recommendations would be subject to FASB approval. FAF received more than 7,367 comment letters on the issue, Polley said.

Germany’s GDP

The German economy is expected to have expanded in the first quarter. Destatis, the German federal statistical office, releases detailed gross domestic product results on Thursday. But preliminary data suggest that the German GDP was up 0.5% in the first three months of the year after slipping 0.2% in the fourth quarter of 2011.

The preliminary numbers beat expectations and kept the euro zone from slipping into recession. Germany owes its quick comeback to surging exports and buoyant consumer spending. Meanwhile, economies of other euro-zone countries are stagnating or sinking deeper into recession.

UK manufacturing, GDP

The CBI industrial trends survey, which is scheduled to be released May 23rd, will show whether the UK manufacturing sector is likely to continue to improve in May.

Of the nearly 400 senior manufacturing executives polled in April, 35% reported a rise in orders compared to 26% who said orders fell. Also, orders and output volume showed modest increases in the three months to April, an encouraging sign following the fragile conditions at the end of 2011 and the beginning of 2012 that put the UK economy into a recession.

The CBI survey, which collects expectations for domestic and export orders, stocks, prices and output, is one of the UK’s longest running business surveys.

Meanwhile, revised gross domestic product numbers may reflect the encouraging signals from the manufacturing sector. Preliminary numbers released by the Office for National Statistics suggested that the UK’s GDP shrunk 0.2% in the first quarter, following a 0.3% contraction in the fourth quarter of 2011.

Insurance on agenda for FASB, IASB

In their continuing effort to reach convergence on a number of topics, the US Financial Accounting Standards Board and the International Accounting Standards Board are scheduled to meet Monday through May 25th in Norwalk, Conn.

A number of elements of the boards’ ongoing project on insurance contracts will be the subject of a significant portion of the discussion. The discount rate that should be used when discounting expected losses in the “three-bucket” model of impairment of financial instruments also will be discussed.

A webcast of the meetings can be accessed through the IASB website.

—From CGMA Magazine staff reports