Double-counting fears ease as w -factor is removed from Basel II capital charge
BASEL - The so-called w -factor that bankers feared could result in double-counting of op risk under the Basel II bank capital accord will be removed from the capital charge provisions of the accord, global banking regulators said in September.
The w-factor was intended to cover certain risks relating to collateral and credit derivatives under the capital charge for credit risk proposed under Basel II. By some interpretations, the w-factor was a charge for legal risk, which falls within the Basel II definition of op risk. Banks might therefore have faced capital
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