Search
 

Banks Rebuff Basel Interest Rate Plan

As Basel Committee considers binding global standards, bank associations call the approach impossible, unnecessary, and 'even dangerous.'

By John Glover, Bloomberg | Updated on September 16, 2015

Global banks hit back at regulators’ “dangerous” plans to tackle interest-rate risk in loan books as markets brace for the U.S. Federal Reserve to raise borrowing costs as early as this week.

The Basel Committee on Banking Supervision has proposed overhauling its rules on interest-rate risk in banking books, including possible binding standards on how banks should measure their resilience to shock changes in benchmark borrowing costs. The draft pertains to customer loans and other assets that lenders expect to hold for long periods, or to maturity, and whose current value can vary when rates change.

"Imposing a standardized methodology leads to comparable numbers in the sense that they are computed in the same way. It does not lead to comparable outcomes."A standardized model for the “regulatory capital treatment of interest rate risks in the banking book is neither possible nor necessary,” the German Banking Industry Committee said in its response to the Basel group. “Quite the contrary: To our point of view, a regulatory standard approach is even dangerous.”

Complete your profile to continue reading and get FREE access to Treasury & Risk, part of your ALM digital membership.

Your access to unlimited Treasury & Risk content isn’t changing.
Once you are an ALM digital member, you’ll receive:

  • Critical Treasury & Risk information including in-depth analysis of treasury and finance best practices, case studies with corporate innovators, informative newsletters, educational webcasts and videos, and resources from industry leaders.
  • Exclusive discounts on ALM and Treasury & Risk events.
  • Access to other award-winning ALM websites including PropertyCasualty360.com and Law.com.

Already have an account?

NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.

Recommended Stories

Treasury & Risk

Join Treasury & Risk

Don’t miss crucial treasury and finance news along with in-depth analysis and insights you need to make informed treasury decisions. Join Treasury & Risk now!

  • Free unlimited access to Treasury & Risk including case studies with corporate innovators, informative newsletters, educational webcasts, and resources from industry leaders.
  • Exclusive discounts on ALM and Treasury & Risk events.
  • Access to other award-winning ALM publications including PropertyCasualty360.com and Law.com.

Already have an account? Sign In Now
Join Treasury & Risk

Copyright © 2024 ALM Global, LLC. All Rights Reserved.