European CVA rules put Asia banks at disadvantage
With European authorities poised to grant a Basel III CVA capital charge exemption to corporates, pension funds and global sovereigns, banks in the region most notably Australia are questioning why there isn't a similar exemption for them?
While Basel III came into effect in parts of Asia from January 1 this year, European authorities have been slower to begin implementation as they iron out the final form in a few remaining areas. One contentious area is the credit valuation adjustment (CVA) capital charge: one of the most punitive of all Basel III's reforms and an area where the orthodox introduction of Basel III by Hong Kong, Australia and Singapore's regulators could leave local banks at a disadvantage to their European peers
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