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SSM: Banks brace for punishment on credit risk, sovereign debt

Apart from standardizing the numerator for banks’ solvency ratio (capital), the eurozone and the Basel Committee on Banking Supervision are going to analyse and, where necessary, harmonise the denominator (risk-weighted assets).

Philippe Bordenave-600
Philippe Bordenave, Chief Operating Officer of BNP Paribas, speaks during a news conference to present the bank's 2014 annual results in Paris, February 5, 2015. BNP Paribas, France's largest bank, said on Thursday that rising taxes and new regulations would impact earnings next year by 500 million euros and unveiled increased cost cuts to cover growing compliance and control expenses. REUTERS/Gonzalo Fuentes (FRANCE - Tags: BUSINESS) - RTR4OB65
© Gonzalo Fuentes / Reuters/REUTERS

Philippe Bordenave, chief operating officer at BNP Paribas

The SSM’s judgement about whether or not there is excess variation in the calculation of risk-weighted assets between banks for similar portfolios is pending as it plans to review 7,000 models over four years.

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