CECL prompts loan sales, hunt for insurance

Risk USA: ‘CECL hogs’ could deplete capital ratios and be a drag on earnings

Sale sign in window

Some US banks are offering to insure loans that will look riskier under the Current Expected Credit Loss accounting standard, while others are looking to buy them outright.

“There are some real CECL hogs in every portfolio. I’m hearing rumours that some banks are interested in offloading CECL hogs and other shops are looking to acquire assets with large CECL reserves,” said Stevan Maglic, head of quantitative risk analytics at Regions Bank. “I understand people are looking at buying protection

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