The IFRS9 accounting standard, which will take effect next year, could exacerbate downturns for European banks, say analysts at Barclays - and while the rules could yet be changed, they add that it might take the 2018 round of stress tests to make the problems clear.

IFRS9 will replace IAS39 in January 2018, changing how banks recognise loan losses. Mike Harrison and Jeremy Sigee of Barclays said in a note published January 9 that the new rules could lead to heightened volatility in banks’ earnings and capital over an economic cycle.