Seasoned international bankers believe that changes are now
necessary in the area of off-balance-sheet financing - an activity
that has exploded out of all recognition in the past decade or two.
"Deregulation started 20 years ago and has gone way too far," says
Minos Zombanakis, a well-known former Euromarket banker who is now
an international financial consultant. "To allow off-balance-sheet
financing of such enormous amounts is ridiculous. Banks use
off-balance-sheet structures all the time to avoid capital
adequacy." He adds: "The whole idea of off balance sheet is wrong.
Consolidation is a necessity. You can use any kinds of structures
during the year that you want, for administrative purposes or
whatever, but when it comes to reporting, you must consolidate.
That is the only way to protect the investor."
The much-criticised ratings agencies may be able to contribute in
this regard. "Off-balance-sheet financing is a very legitimate area
of concern,"...
