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Article
Banks Warn Flawed Hedge Accounting Rules Threaten Balance Sheet Efficiency
A global bank's senior IRRBB executive warns that proposed risk mitigation accounting reforms could restrict hedging flexibility and undermine balance sheet efficiency. Advocating an alternative "held for hedging" approach, he urges banks to challenge accounting constraints that complicate structural hedging, increase costs and create unnecessary liquidity and capital trade-offs.
Oct 23, 2026
Center for Financial Professionals ,
Tags:
ALM, Treasury and Liquidity Risk
The views and opinions expressed in this content are those of the thought leader as an individual and are not attributed to CeFPro or any other organization
- Global bank executive
challenges proposed IASB risk mitigation accounting reforms
- Internal testing
reveals significant difficulties implementing the RMA framework
- Existing hedge
accounting rules can distort structural interest rate risk management
- Proposed "held
for hedging" model would align accounting with business strategy
- Greater derivative
flexibility could improve liquidity and capital efficiency
- Fair value
disclosures would remain essential for investor transparency
- Prudential regulators
should oversee excessive risk rather than accounting rules
- Banks urged to
contribute evidence before the November consultation deadline
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