Shearman And Sterling

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May 02, 2013

Basel Developments: A Renewed Focus on Credit Risk Mitigation Transactions and Regulatory Capital Arbitrage

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Transactions that reduce regulatory capital requirements for banks have recently come under media and regulatory scrutiny. The New York Times characterized them as a “trading sleight of hand.” The Basel Committee on Banking Supervision has proposed limiting the ways in which capital requirements can be reduced by such transactions. This client note discusses the new Basel proposals in light of prior guidance published by Basel and the Federal Reserve. As banks seek ways to meet heightened capital requirements and surcharges that are being implemented, they may find greater difficulties in reducing their exposures.

View full memo, "Basel Developments: A Renewed Focus on Credit Risk Mitigation Transactions and Regulatory Capital Arbitrage"

Authors and Contributors

Barnabas Reynolds

Partner

Financial Institutions Advisory & Financial Regulatory

+44 20 7655 5528

+44 20 7655 5528

London

Bradley K. Sabel

Of Counsel

Financial Institutions Advisory & Financial Regulatory

+1 212 848 8410

+1 212 848 8410

New York

Thomas Donegan

Partner

Financial Institutions Advisory & Financial Regulatory

+44 20 7655 5566

+44 20 7655 5566

London