Discounting change magnifies HSBC FVA loss

UK bank's funding charge jumps 75% to $460m

HSBC sign
HSBC: latest to post FVA loss

HSBC recorded a funding valuation adjustment (FVA) charge of $263 million in its annual report last month, making it the 16th major bank to reflect the cost of funding uncollateralised derivatives in its income statement.

There was a quirk in the bank's announcement, though: a separate decision to embrace a new, lower discounting rate for uncollateralised swaps pushed the total fair value change to $460 million.

Out of the $263 million reduction in net trading income, $164 million came from the

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