US farm lenders fear clearing will trip leverage ratio

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The requirement to post initial and variation margin on centrally cleared derivatives trades could cause US farm credit banks (FCBs) to breach their regulator-set leverage ratios, the banks warn – potentially forcing them to suspend dividend payments, raise new capital, or sell off assets. The four banks – AgFirst, AgriBank, Farm Credit Bank of Texas and CoBank – are seeking a clearing exemption, and have urged their regulator, the Farm Credit Administration (FCA), to intervene.

The FCBs, which

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