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

To continue reading...

You need to sign in to use this feature. If you don’t have a Risk.net account, please register for a trial.

Sign in
You are currently on corporate access.

To use this feature you will need an individual account. If you have one already please sign in.

Sign in.

Alternatively you can request an indvidual account here: