Basel DVA proposals could subtract billions from bank capital

DVA doubts

Jon Gregory

The idea of banks booking profits as their credit deteriorates does not sit comfortably with many people – even less so after this accounting concept, the debit value adjustment (DVA), generated combined earnings of $9.35 billion at five US banks in the third quarter of 2011. To critics, these numbers are fictitious, but truth is secondary to consistency for a senior risk manager at one US bank.

“I don’t care about truth in accounting rules. I have to use it, it goes into my reports, I’m charged

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