Banks and retailers hit by accounting changes

Britain's banks and retailers are facing a £60bn increase in their balance sheet liabilities if proposed accounting changes are implemented in 2013.

The massive hit follows the publication last week of a draft document from the International Accounting Standards Board that calls for substantial changes in how leasing commitments are reflected on balance sheets.

It will affect any company that leases equipment or assets such as properties, including bank branches or supermarkets, aircraft, ships or even photocopiers. The new standard will require that companies hold and recognise the liabilities of the leases on their balance sheets rather than the current standard of having them off-balance sheet. It said this would be a truer reflection of a company's assets and liabilities.

Veronica Poole, the audit partner and head of the Deloitte Global IFRS leadership team, said the top 50 FTSE companies had total operating lease commitments of around £94bn. She said the economics of a leasing deal would not change but the accounting treatment would "make for a very different picture on a company's profit and loss sheet".

The US Securities and Exchange Commission said last week that liabilities for the US total $1.3trn.

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