As a result of recent sovereign debt1 developments and the increased market interest in this area, there has been a lot of focus on the accounting practices of listed companies, and financial institutions in particular, with respect to their exposures to sovereign debt.

On 28 July 2011 ESMA issued a Statement2 stressing the need for enhanced transparency and the impor-tance of applying the relevant International Financial Reporting Standards (IFRS). ESMA also encouraged issuers to provide information on their exposures to sovereign debt on a country-by-country basis in their financial statements.

Since then ESMA conducted together with national competent authorities a fact-finding exercise on the accounting treatment of Greek sovereign debt in the half-year financial statements based on a sample of financial institutions listed in EU regulated markets.