This report explores the link between leverage and valuation in the light of the recent experience of market stress. Prior to the crisis, traditional balance sheet measures of leverage did not give an unambiguous signal of higher risk during the boom years of 2003-07. While balance sheet leverage increased at European banks and US investment […]
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The recommendations cover the following areas: the bank capital framework, bank loan loss provisions, and leverage and valuation.
2 April 2009
These Principles aim to ensure effective governance of compensation, alignment of compensation with prudent risk taking and effective supervisory oversight and stakeholder engagement in compensation.
The objective of financial crisis management is to seek to prevent serious domestic or international financial instability that would have an adverse impact on the real
economy.
The principles in this document promote strong governance processes around valuations; the use of reliable inputs and diverse information sources; the articulation and communication of valuation uncertainty to internal and external stakeholders; the allocation of sufficient banking and supervisory resources to the valuation process; independent verification and validation processes; consistency in valuation practices for risk management and reporting purposes, where possible; and strong supervisory oversight around bank valuation practices.
This document includes high-level principles for cross-border cooperation on crisis management between relevant authorities.
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