Off balance sheet finance and Off balance sheet risk: Difference between pages

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Any form of finance that does not result in a corresponding liability appearing on a reporting entity's published balance sheet.
1. ''Liquidity and funding risk in banks.''


On double entry bookkeeping principles the asset being financed cannot appear either.
Off balance sheet sources of liquidity risks for banks include items which might cause demands for additional funding in the future. These include:
*Contingent liabilities such as guarantees.
*Undrawn lending facilities.
*Derivative instruments.
*Securitisation special purpose vehicles.


The effect of such financing and accounting methods is to show the entity's borrowings and financial risk at a lower level than they really are.


2. ''Capital risk in banks.''


==See also==
The risk of adverse effects on the bank's profits and capital, from similar off balance sheet sources.


3.
Any risks to an organisation arising from events, contingencies or relationships not recorded in the organisation's balance sheet.
For example, repo-to-maturity transactions.
== See also ==
* [[Balance sheet]]
* [[Balance sheet]]
* [[Double entry]]
*[[Credit Conversion Factor]] (CCF)
* [[Finance lease]]
* [[Contingent liabilities]]
* [[Gearing]]
* [[Derivative instrument]]
* [[IAS 17]]
* [[Entity]]
* [[Liabilities]]
* [[FRS  102]]
* [[IFRS 16]]
* [[Leverage Ratio Exposure]]
* [[Liquidity risk]]
* [[Off balance sheet]]
* [[Off balance sheet]]
* [[Off balance sheet finance]]
* [[Repo-to-maturity]]
* [[Required Stable Funding]]
* [[Securitisation special purpose vehicle]]


[[Category:Accounting_and_Reporting]]
[[Category:Identify_and_assess_risks]]

Latest revision as of 15:42, 26 June 2022

1. Liquidity and funding risk in banks.

Off balance sheet sources of liquidity risks for banks include items which might cause demands for additional funding in the future. These include:

  • Contingent liabilities such as guarantees.
  • Undrawn lending facilities.
  • Derivative instruments.
  • Securitisation special purpose vehicles.


2. Capital risk in banks.

The risk of adverse effects on the bank's profits and capital, from similar off balance sheet sources.


3.

Any risks to an organisation arising from events, contingencies or relationships not recorded in the organisation's balance sheet.

For example, repo-to-maturity transactions.


See also

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