They fear balance sheets could be hit with billions of euros of potential losses from derivatives

Europe's banks warned the European Commission against endorsing new accounting standards, which they fear could hit balance sheets with billions of euros of potential losses from derivatives, the Financial Times said. The Commission hopes to reach a deal with the International Accounting Standards Board. If it endorses the board's proposals for interest rate derivatives, 7,000 listed companies in the European Union will have to apply them from next January. But the European Banking Federation, spearheaded by French banks, has objected to the prospective agreement between the Commission and the IASB, the FT said on Thursday. Under such a deal, banks would still have to show derivatives at market or 'fair' value - the measure they believe would dangerously increase volatility. But the information would be ring-fenced from the rest of the balance sheet, and over the medium term the board would look at an alternative proposal from the banking federation, the paper said.