Basel DVA capital deduction could cost banks billions

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Banks could see billions of dollars removed from their stock of capital if regulators go through with a plan to exclude debit value adjustment (DVA) on derivatives portfolios from equity capital calculations. The proposal, published on December 16 by the Basel Committee on Banking Supervision, would also result in conflict between accounting rules and prudential standards.

"A typical dealer's total DVA could easily be around $2 billion – so excluding this from capital would be very significant f

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