HSH’s plight underlines EBA absurdity
CRD III has given HSH Nordbank’s capital ratios a tough time. Nothing new there, but the effects of resecuritisation rules are perverse, even by EBA standards. The hapless lender has painted itself into a corner but the least the wider market can do is question the EBA’s numbers.
At the beginning of the year, HSH Nordbank gained 12bn in risk-weighted assets. Almost 3% of its core tier one ratio was knocked off overnight.
The reason was the CRD III treatment of resecuritisations CDOs of ABS, or CDO2
. Of course, we have all heard ad nauseam
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