Basel Committee takes edge off toughest part of NPL proposals

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By Owen Sanderson
26 Nov 2020

The Basel Committee has backed down from tough new changes which could have raised the costs of financing non-performing loan portfolios, allowing banks to use external ratings to assess the risk of NPL securitizations.

The Committee proposed a package of measures in June described as a “technical tweak” but with far-reaching implications for banks’ abilities to finance the purchase of NPLs.

The “technical tweak” was supposed to solve a real problem in NPL financing — existing risk calculations struggled to deal with the ...

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