Representations and warranties and Required Stable Funding: Difference between pages

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imported>Doug Williamson
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imported>Doug Williamson
(Expand. Source: BIS http://www.bis.org/bcbs/publ/d295.pdf)
 
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A section of a loan agreement in which the borrower asserts the truth of information regarding the borrower's state of affairs.
''Bank regulation - funding risk''.


They generally assert that the borrower is empowered to borrow, that it is legally constituted and so forth.
(RSF).


They may also assert that there is no legal claim against the borrower at the time of the agreement being made.
Required Stable Funding (RSF) is an input to the calculation of the net stable funding ratio (NSFR) for bank prudential management purposes.


Whilst there are some technical differences between the effects of representations and of warranties, most loan agreements in practice set out these clauses to be both representations ''and'' warranties.
The NSFR compares:
*The amount of funding which a bank needs to fund its assets and off balance sheet commitments (RSF), with
*The amount of stable funding which the bank currently has, known as the Available Stable Funding (ASF).
 
 
A bank's Required Stable Funding (RSF) is calculated from its assets, weighted according to their maturity, credit quality and liquidity, together with an amount in relation to off balance sheet commitments.
 
Definitions for the RSF calculation generally mirror those used in the Liquidity Coverage Ratio (LCR).




== See also ==
== See also ==
* [[Covenant]]
* [[Available Stable Funding]]
* [[Event of default]]
* [[Basel III]]
* [[Loan agreement]]
* [[Funding]]
* [[Warranty]]
* [[Funding ratio]]
 
* [[Liquidity]]
[[Category:Treasury_operations_infrastructure]]
* [[Liquidity Coverage Ratio]]
* [[Net stable funding ratio]]
* [[Off balance sheet]]

Revision as of 16:04, 22 August 2016

Bank regulation - funding risk.

(RSF).

Required Stable Funding (RSF) is an input to the calculation of the net stable funding ratio (NSFR) for bank prudential management purposes.

The NSFR compares:

  • The amount of funding which a bank needs to fund its assets and off balance sheet commitments (RSF), with
  • The amount of stable funding which the bank currently has, known as the Available Stable Funding (ASF).


A bank's Required Stable Funding (RSF) is calculated from its assets, weighted according to their maturity, credit quality and liquidity, together with an amount in relation to off balance sheet commitments.

Definitions for the RSF calculation generally mirror those used in the Liquidity Coverage Ratio (LCR).


See also