Banks criticise plan to deduct DVA from equity capital
Comment letters from Isda and Bank of Montreal argue Basel Committee proposal on DVA deductions goes too far
Banks have criticised the Basel Committee on Banking Supervision's proposal to deduct debit value adjustment (DVA) from common equity, calling it unnecessarily punitive and arguing it does not reflect how DVA is recorded.
In one comment letter, the International Swaps and Derivatives Association says it is too soon to agree a blanket approach, and calls on regulators to delay rules on the capital treatment for DVA – and its counterpart, credit value adjustment (CVA) – until consensus has emerged
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