The Danish Compromise
The treatment of insurance holdings within conglomerates for the purpose of calculating the CRR capital ratios is known as the Danish Compromise.
This allows banks with insurance subsidiaries to include the value of equity in the company in the bank’s risk weighted asset (RWA) calculation. The preferential treatment boosts CET1 ratios.While analysts are unsure whether the benefit of the Danish Compromise will be disallowed, they do agree its usage is ...
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