After a series of bank bailouts and collapses, authorities around the world began changing the rules to ease some of the pressure, rolling back what had been a key reform towards a much more market-orientated system promoted.

When banks reported their earnings, they have been required to value the assets on their balance sheet at current market value — a system known as ‘mark to market.’

As the financial markets soared, such assets — loans, securities, derivatives, mortgages, property — rose in value, showing the banks to be strongly capitalized and so capable of lending out even more.

Come the collapse of the U.S. subprime home loan market and the resulting global credit crunch, all financial markets have tumbled, with those same assets now sharply marked down in value, some even worthless.

As a result over the past months, the banks have seen their balance sheets ravaged, forcing them to seek cash at all costs to protect their capital position — those that could not get funding had to be bailed out or close.

In an effort to help, the European Commission in mid-October allowed banks to reclassify some of their assets so they would not have to be marked to market immediately, giving them a key breathing space in the hope that the markets will recover in due course.

One of the first beneficiaries was Germany’s biggest bank, Deutsche Bank, which last week felt strong enough to reject any offer of state aid as it reported a third quarter net profit of 414 million euros — down 74 percent but still in the black.

In sharp contrast, Commerzbank, the second-biggest German bank, said on Monday it will tap a government rescue fund for 8.2 billion euros and 15 billion in debt guarantees after it reported a third quarter net loss of third quarter net loss of 285 million euros.

Analysts said this reflects how some banks will do better than others from the relaxation of the rules while the overall impact may not be as positive or as helpful as officials hope, analysts said.

Jean-Louis Mullenbach, head of specialist accounting firm BMA, said the changes had been rushed through under “intense political pressure ... (and) after unbelievable lobbying by the banks.”

The change “has not been thought through,” Mullenbahk said, adding that implementation was unclear, meaning there “was the risk that how it is done varies from bank to bank.”

“It is not that way that one is going to restore confidence in the banks,” said Alain Dupuis of Oddo Securities.

“The need to allow (assets) to depreciate remains in full,” he said, referring to calls for the system to purge itself of all the bad loans now on the banks’ books.

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