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DefplayerWhat is your specific area of risk that concerns you...

  1. 393 Posts.
    Defplayer

    What is your specific area of risk that concerns you with regard banks off balance items? Credit (c/party & customer), Interest rate, Market?

    We do know "what these items are" off balance sheet items within the big banks in most cases reflect hedging activity. Heavy dealing in interest rate swaps would be the obvious and biggest area of activity. Banks manage their interest rate risk via your so called "bull####" items".

    A derivative is only off balance sheet at the outset if no funds are outlayed. Once unrealised profits/losses occur the derivative appears on the balance sheet (profit-asset, loss-liability). Derivatives are still managed via VaR and other aspects no matter if they're on or off balance sheet.
    It hasn't been all bad, big 4 lending market share and deposit flows have increased as a result of the credit market turmoil.
 
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