Sovereigns facing price hike if CVA exemption is axed

EBRD says impact would be minimal, but experts warn other swaps users would be hit

Sovereigns are facing higher derivatives costs, after the European Banking Authority (EBA) confirmed they will not be spared in plans to bring Europe's version of Basel III in line with the international standard. That requires the removal of exemptions to a key capital charge, and sovereigns are one of the groups currently benefiting, along with non-financial corporates and pension funds.

EBA officials called for the removal of the exemptions during a public meeting in London on December 5, spa