By Bora Yagiz, Compliance Complete
NEW YORK, Apr. 9 (Thomson Reuters Accelus) - The Basel Committee’s March 26 plan on the supervisory framework for measuring and controlling large exposures is offering a new insight into how internationally active banks should determine their level of exposures to a single counterparty and a group of connected counterparties, and which factors they should weigh in making the necessary calculations.
The proposed framework recognizes for the first time that no form of concentration risk has been considered in the previous calculation of capital requirements. It, therefore, considers a large exposures framework to be complementing the Committee’s work on risk-based capital standards, which by themselves do not take into account the possibility of large losses due to concentration risk. (more…)