Skip to main content
NSFR COMMENT PERIOD FOR US BANKS
The FDIC and other US agencies have issued guidance on new proposed funding rules for large banks and those with significant on-balance sheet foreign exposures. The rule which somewhat follows the Basel NSFR (Net stable funding ratio) rules, measures a firm's quantum of stable funding (including equity and liabilities) to its required level of stable funding as a fraction, over a specific period of time, say one year. The required level of funding would be calculated based on the bank's portfolio of asset maturities, derivatives exposures and lending profiles. Banks are typically required to maintain a NSFR of 1 and there are biting consequences if a bank falls below this rate. The official US guidelines can be found at: https://fdic.gov/news/board/2016/2016-04-26_notice_dis_c_fr.pdf. NSFRs are increasingly showing up in bank risk appetite statements as an important relative liquidity metric reviewed by the board.
The FDIC and other US agencies have issued guidance on new proposed funding rules for large banks and those with significant on-balance sheet foreign exposures. The rule which somewhat follows the Basel NSFR (Net stable funding ratio) rules, measures a firm's quantum of stable funding (including equity and liabilities) to its required level of stable funding as a fraction, over a specific period of time, say one year. The required level of funding would be calculated based on the bank's portfolio of asset maturities, derivatives exposures and lending profiles. Banks are typically required to maintain a NSFR of 1 and there are biting consequences if a bank falls below this rate. The official US guidelines can be found at: https://fdic.gov/news/board/2016/2016-04-26_notice_dis_c_fr.pdf. NSFRs are increasingly showing up in bank risk appetite statements as an important relative liquidity metric reviewed by the board.
Comments
Post a Comment