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EU banks fear Brexit battle over FRTB internal models
Bank of England approach looks easier, but that may not make much difference to model uptake
In the future, banks won’t grow internal models for market risk just anywhere. Much like farmers needing the optimal soil and climate for their crops, the largest investment banks will need the perfect conditions to reap the full benefits of modelling. The fertile ground will be characterised by low costs and high capital savings.
Previously, conditions across Europe were essentially the same. But since Brexit, the UK climate has started to diverge. Bankers spot ways the draft UK rules may
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