Loss-sharing rule and Loss absorbing capacity: Difference between pages

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An agreement between participants in a transfer system or clearing house arrangement regarding the allocation of any loss arising when one or more participants fail to fulfil their obligation.
''Bank supervision''


The arrangement stipulates how the loss will be shared among the parties concerned in the event that the agreement is activated.  
(LAC).


In the field of bank [[resolution]] and [[recovery]], loss absorbing capacity is the ability of a bank to suffer losses without falling below regulatory minima of capital and requiring re-capitalisation or [[resolution]].


Also known as Loss-sharing agreement.
LAC may take the form of equity, subordinated debt, senior unsecured debt, and other unsecured uninsured liabilities.




== See also ==
== See also ==
* [[Loss]]
*[[Bank supervision]]
* [[Transfer]]
*[[Total Loss Absorbing Capacity]]  
*[[PLAC]] primary loss absorbing capacity
*[[SLAC]] secondary loss absorbing capacity
*[[GCLAC]] or GLAC gone-concern loss absorbing capacity
*[[MREL]] minimum requirement for own funds and eligible liabilities
*[[MCT]]
 
[[Category:Compliance_and_audit]]
[[Category:Risk_frameworks]]

Revision as of 21:21, 20 November 2016

Bank supervision

(LAC).

In the field of bank resolution and recovery, loss absorbing capacity is the ability of a bank to suffer losses without falling below regulatory minima of capital and requiring re-capitalisation or resolution.

LAC may take the form of equity, subordinated debt, senior unsecured debt, and other unsecured uninsured liabilities.


See also