Traders buy and sell financial products. As a result they often have positions or exposures. These exposures can arise because they are speculating or they have simply hedged against the other side of trade with client. Whatever the reason as prices move the market value of these positions will change.This means that movements in foreign […]
Leverage means the relative size of an institution’s assets compared to that institution’s own funds. Need to say the banks are highly leveraged institutions as most of the funds are taken from bank’s clients. So banks use client’s money for their deals.The financial crisis in 2007 – 2008 like other crisis in the past was […]
28. 4. 2019
Regarding to figure out how to stop banks failing it helps to start with an understanding of why they fail. There’s two basic risks that banks need to watch out for – (i) solvency and (ii) liquidity. Liquidity issues arise as a result of banks undertaking maturity transformation, which is obtaining short term deposits from […]
28. 4. 2019
Reverse repurchase agreements (reverse repos) are transactions in which an institution lends cash in exchange for financial assets sold by the owner of the financial assets at a given price under a commitment by the owner of the financial assets to repurchase the same (or identical) assets at a fixed price on a specified future […]
14. 4. 2019
Credit Valuation Adjustment (CVA) is a measure of the “market value of counterparty risk” and is effectively the long term credit loss that could be expected on a counterparty’s portfolio of transactions. CVA is calculated by applying a default probability (usually derived from Credit Default Swap data or proxies) and expected recovery to the expected […]
11. 4. 2019
The Bank for International Settlements (BIS) is an international organization which was formed in 1930 with the objective of serving the Central Banks of various nations, aiding them to develop an environment of monetary and financial stability via concerted efforts to bring about International co-operation. The Bank for International Settlements popularly termed as “Bank for […]
3. 4. 2019
Since the establishment of the LMA in London (in 1996), total membership in the Association has grown steadily and currently stands at over 700 organisations covering in excess of 60 nationalities, comprising commercial and investment banks, institutional investors, law firms, service providers and rating agencies. The Loan Market Association has as its key objective improving […]
14. 3. 2019
the level of Capital to cover the lending, derivatives and other banking activities (and income generating assets) as defined by Capital Requirements Regulation (EU) No. 575/2013 reflecting Basel III rules on capital measurement and capital standards. Capital adequacy represents most important financial ratio in banking sector, that central regulators always watch very closely. It is […]
10. 3. 2019
period given by the credit contract to avoid the potential Event of Default, after breach of the covenants or missed scheduled installment took place. Each credit contract should contain such stipulation that Borrower has additional period either to deliver payments from Installment schedule or to fix breached covenant (e.g. Solvency ratio may be improved via […]
10. 3. 2019
Positive / Negative difference between purchase costs of assets and their fair market value depending on accounting standards that are locally applied (some assets like lands or trade receivables remain booked in original accounting value). If any difference as stated above occurs, this is referring to revaluation impairment. Further there can be also revaluation stemming […]
10. 3. 2019