Capital Conservation Buffer and Net asset value: Difference between pages

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(CCB).
(NAV).  


The Capital Conservation Buffer is a macroprudential [[capital adequacy]] requirement for all banks to build up an additional loss-absorbing capital cushion to improve their resilience to stresses.  
1.


A method of valuing a business which is based on the sum of the values of each of its assets, less its total liabilities.


The idea is for banks to build up the loss-absorbing cushions outside periods of stress, to be drawn down if losses are incurred in the future.
The current balance sheet of the business would normally be the starting point for a net asset valuation.


The (starting) book values of assets and liabilities in the balance sheet are then appropriately adjusted to reflect relevant current market values.


Under Basel III the CCB is 2.5% of risk weighted assets.
Further adjustments are then made for the addition of any other relevant assets and liabilities (not reflected in the starting balance sheet).




The CCB is subject to a 3-year phase in period from 1 January 2016 to 1 January 2019.
2.


Similar valuation methods applied to other entities.


(Capital Conservation Buffer is sometimes abbreviated to 'CCoB'.)


== See also ==
* [[Accumulating net asset value]]
* [[Book value]]
* [[Constant net asset value]]
* [[Going concern]]
* [[Gone concern]]
* [[Investment trust]]
* [[Low-volatility NAV]]
* [[Net]]
* [[Tangible net worth]]
* [[Variable net asset value]]


== See also ==
[[Category:Investment]]
* [[Basel III]]
* [[Capital adequacy]]
* [[Capital buffer]]
* [[Countercyclical buffer]]
* [[CRD IV]]
* [[Macroprudential]]
* [[Stress]]
* [[Total Loss Absorbing Capacity]]

Revision as of 17:51, 11 February 2022

(NAV).

1.

A method of valuing a business which is based on the sum of the values of each of its assets, less its total liabilities.

The current balance sheet of the business would normally be the starting point for a net asset valuation.

The (starting) book values of assets and liabilities in the balance sheet are then appropriately adjusted to reflect relevant current market values.

Further adjustments are then made for the addition of any other relevant assets and liabilities (not reflected in the starting balance sheet).


2.

Similar valuation methods applied to other entities.


See also