Finding a balance
Regulators are currently working on guidelines governing large exposures, with the results of a European review of large exposure rules published in April. But these rules could increase complexity for banks, already laden with regulation. By Michel Dorval
The risk posed by large exposures to single counterparties has leapt up most managers' agendas in recent months. Hefty writedowns by investment banks of their US subprime mortgage exposures, the revelation by Société Générale that a rogue trader had cost it EUR4.9 billion, and the near collapse and subsequent acquisition of Bear Stearns has hammered home that large, highly rated counterparties are not as safe as once thought.
The treatment of large exposures had attracted regulators' attention
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