Counterparty charge an act too far?

The Basel Committee shocked many bankers in December by unleashing proposals to significantly increase capital requirements for counterparty risk exposures. But industry participants argue the measures overlap with each other and could hike up capital to unrealistic levels. Joel Clark reports


The reaction of the banking industry to the publication on December 17 of long-awaited reforms to the Basel II capital framework spans the entire spectrum, from utter incredulity to grim acceptance. But even the most accepting found a proposal to increase capital requirements for counterparty credit risk surprising. While the prospect of a leverage ratio, higher quality capital and new liquidity requirements had been widely anticipated and discussed in advance, the revelation the Basel Committee

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Credit risk & modelling – Special report 2021

This Risk special report provides an insight on the challenges facing banks in measuring and mitigating credit risk in the current environment, and the strategies they are deploying to adapt to a more stringent regulatory approach.

The wild world of credit models

The Covid-19 pandemic has induced a kind of schizophrenia in loan-loss models. When the pandemic hit, banks overprovisioned for credit losses on the assumption that the economy would head south. But when government stimulus packages put wads of cash in…

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