Banks split on accounting for KVA – Risk survey

Accounting standard is coming, say some - others see no KVA requirement

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Banks divided on how and whether to recognise KVA

Banks are divided on whether the capital costs associated with their trading businesses will ultimately be recognised in the form of an accounting charge, even though the majority of respondents to a Risk survey already include the so-called capital valuation adjustment (KVA) when pricing trades.

Eight of the 10 respondents currently price KVA – primarily for derivatives and other capital-intensive product lines – but none have plans to voluntarily recognise the adjustment in their accounts.

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