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Reverse-Lag Reserve Accounting, Bank Behavior, and Monetary Control: A Formal Analysis I. Introduction Recently, Laurent [1979] has proposed a system of reverse-lag accounting (RLA) for bank reserve requirements that he [...]

The article reports on banks to be mandated by Nigeria to help restructure its London Club commercial debt in a landmark trade. It will issue a new dual tranche dollar denominated Eurobond to redeem its commercial debt. It is the final step in its debt restructuring programme initiated by President Olusegun Obasanjo. The government wants to maintain a presence in the bond market despite having more than $40 billion currency reserves.

The article informs that when Merrill Lynch & Co. Inc. will announce fourth-quarter results this week, one of the first things that investors will check is whether the firm finally has corrected problems in its $ 5.5 billion small business loan portfolio. The business financial services unit had unexpectedly large loan loss provisions last year, which reduced Merrill's reported net income at a time when other banks increased their earnings by releasing loan reserves. The financial services giant says the situation is much improved after a series of management changes and tougher monitoring of the loans that it makes.

The article discusses the National Credit Union Administration's (NCUA) planned folding of a post-crisis emergency reserve into its share insurance fund as of October 2017. Topics covered include the resulting increase of the share insurance fund equity ratio and paying of about 800 million dollars to credit unions in early 2018, and the initial opposition to the fund merger. Also noted are U.S. banks' seeming fatigue over recent legal tussles to be able to comment on the NCUA move.

The article reports on the move of financial regulators in the U.S. who are mulling on whether more reserves at major banks will be required as large banks are risks to the country's financial system. It states that banks may be forced to increase their equity against all assets as regulators want them to reduce their size. It adds that banks are against the idea as it could force them to stop granting loans, which could hinder economic development.

The article discusses the decision of the Hong Kong Monetary Authority (HKMA) to relax its rules on the banks' reserve requirement of renminbi deposits. It is expected that the HKMA decision will boost liquidity and lending and encourage authorities to further reduce the reserve ratio. HKMA allows banks to include Chinese sovereign bonds and local currency notes traded in the interbank bond market to be included in the risk management limit computation or reserve requirements.

The article focuses on a report by the inspector general of the Troubled Asset Relief Program, regarding Citigroup's expected failure. It is stated that there has been a decease to 274.2 billion dollars in Citi's available balance of funds in the U.S. division. According to Federal Reserve Chairman Ben Bernanke, companies and governments will not be able to pay employees following Citi's failure as it is a central player in the global banking system.

The article focuses on the role of China in helping other countries which are affected by the global financial crises. It states that China's relative immunity from global economic crises because of its nationalized banking system, has put it in a position to act as rescuer of the global financial system. It also explores the purchase of the country on the U.S. Treasuries and its vast dollar-dominated foreign reserves.

The article reports that Michigan-based Independent Bank Corp. expects to add between $13 million and $16 million to its credit provision. According to the company, the stated additional loss reserve is higher than historically expected. Michael Magee, president and CEO of Independent Bank, denotes that the increase in anticipated loan losses is attributed to the weak economy of the state, particularly the real estate development market.

Reports that Temple Inland Corp. will take an after tax hit on its mortgage business in the third quarter as it prepares reserves related to key asset sales and layoffs. Temple's sale of its 100-branch, non-bank mortgage network in servicing rights; Firms that expressed interest in the branch network.

Reports on the plan of Federal Reserve chairman Alan Greenspan to privatize government-sponsored enterprises in the U.S. Creation of a strong independent regulator for home loan systems; Concerns over the effects of the move on debt insurance; Effects of the plan on mortgage cost.

The article discusses a proposal being considered by the U.S. Financial Accounting Standards Board (FASB) that would require banks to set aside reserves based on long-range expectations for losses. While some point out the change would help banks more accurately determine the present value of future cash flows, critics say it redistribute credit costs in a way that reduces income.

The article reports that even though capital reserves in the Federal Home Loan Bank of Seattle are expected to drop below the minimum requirements, company president Richard Riccobono does not plan to increase capital. He reported that if the bank takes in more capital, it is required by law to invest it in certain mortgage-related assets. These assets have lost significant value in 2008 and 2009, and he does not want to risk even more losses.

The article offers news briefs related to the banking industry in the U.S. as of November 18, 2015. Topics include the Federal Housing Administration (FHA) announcing the growth of capital reserve ratio by 2.07 percent at end of September 2015. Philip Vasan resigning as head of U.S. private banking at Credit Suisse AG. The report of National Community Reinvestment Coalition shows that lenders in 2013 made mortgage loans to Caucasians compared to African Americans.

The article reports on the challenges in calculating loan-loss reserves for bankers caught between mounting credit losses and government accounting regulations. Auditors and the U.S. Securities and Exchange Commission enforce rules against reserving more than current losses indicate, whereas many lenders would prefer to be better protected from risk.

This article reports on U.S. federal banking regulators, which are initiating a broad effort to clarify how banks account for bad loans, which also sends regulators back into a debate that has stubbornly defied all attempts at a resolution. The article explains that the business of reserving for loan losses has been high drama for years. Auditor inspection reports by the Public Company Accounting Oversight Board triggered the latest flare-up, which accuses almost every large and mid-size accounting firm for audit deficiencies regarding loan-loss reserves at banks.

Discusses the effect of an accounting rule change on how loan-loss reserves are shown in merger-and-acquisition analysis. How Zions Bancorp's purchase of Amegy Bancorp. Inc. is the first transaction to apply the new rule; Other pending mergers that will be affected by the new rule such as Bank of America's purchase of MBNA; Comments from Doyle Arnold of Zions and Manuel Ramirez, an analyst with Keefe, Bruyette & Woods.

Reports that the Federal Deposit Insurance Corporation (FDIC) sees threats from rising reserves and interest rates. Comments of FDIC officials, who said that various obstacles will make it difficult for the industry to top its performance again this year; Impact of the trade deficit and the rising cost of energy on economic growth; Implications of rising interest rates for credit quality on adjustable-rate products; Why regulators are especially wary of home equity loans; Information on the slowing pace of industry consolidation; Other challenges, including finding new loan customers; Outlook.

Reports that although three quarterly earnings reports from three Ohio banks shows that each posted double-digit percentage gains that beat Wall Street estimates, they way they earned the profits was totally different. National City Corp which beat estimates by 12 cents per share which was helped by hedging gains; KeyCorp which came in 2 cents ahead through lending and lower provisioning; Fifth Third Bancorp which bested estimates by 3 cents per share through reduced loan reserves; How all three banks had a different view on commercial loan demand and lending profits; Details of the accounting for each bank.

The article discusses the changes finalized by the Federal Reserve Board to rules governing the calculation of interest payments on excess cash reserves held at regional Fed Banks. The proposed changes calculate the interest payable on excess reserves on a daily basis instead of on a maintenance period average while the interest paid on the reserves will continue to be paid on a maintenance period average under the proposal.

The article discusses the position of Asian banks in light of European Union deleveraging. Morgan Stanley states that Asian central banks are expected to initiate monetary easing in 2012 due to European financials continued deleveraging. India, Indonesia and Korea are cited as the countries at most risk from deleveraging. Central bank action in Asia is reportedly expected to include reserve ratio rates and unwinding Open Market Operations (OMO).

The article reports on the possible effect of an increase in the reserve ratio requirement (RRR) for banks by the People's Bank of China (PBoC) on April 17, 2011 on offshore funding among Chinese corporations and loan pricing. A senior loans banker predicted an increase in incidence of Chinese corporates borrowing offshore. The RRR for large banks and smaller banks reached a record high of 20.5% and 18.5%, respectively. Also noted is the possible implementation of a 50-basis point hike in RRR in the coming months.

The article discusses the Federal Reserve Board and restrictions on consumer savings account transactions. The Federal Reserve Board has announced that it will remove certain restrictions from transactions for consumer savings accounts which will enable banks to put balances in accounts which are more than their reserve requirements so that they can earn interest.

The article offers a look at the real economy of Brazil. The financial environment is likely to have more significant short-term repercussions for Brazilian corporates than for those in a number of other countries. There are three Brazil-specific reasons for this. Firstly, many Brazilian corporates used derivatives to hedge against changes in the value of the real. The second Brazil-specific challenge for corporates is increasing risk aversion by Brazilian banks as a result of the liquidity crisis, the depreciation of the real and the broader global financial and economic panic of recent months. Thirdly, slower global growth and increased risk aversion is also likely to hit foreign direct investment.

The article discusses the economic conditions in Cambodia in 2009. The Camko City, funded by Korean banks, entered a joint venture with the Korean Stock Exchange. Private equity firms in the country will be settling in the 52-storey IFC building in Phnom Penh. The National Bank increased capital reserve requirements for banks from 8% to 16%.

The author reports on an increase in the amount of money which banks and thrifts can exempt from reserve requirements set up by the U.S. Federal Reserve Board for 2008. Banks and thrifts are able to exempt more than nine million dollars in 2008, a nine percent increase in exemptions compared to 2007. Changes which are occurring to net transaction accounts are discussed.

This section presents finance-related updates in Latin America as of August 2005. Argentina sold its first dollar bond since the default at the end of 2001, when it issued $500 million of debt maturing in 2012. The bonds, which carried a coupon of 7.99%, were more than three times oversubscribed. Foreign investment banks led investor demand. Venezuela's lawmakers are passing legislation that will give the government greater influence over the central bank. The law will enable President Hugo Chávez' government to withdraw and spend at least $5 billion of the bank's international reserves. At $29 billion, Venezuela's reserves are the highest in Latin America, boosted by the high oil price. Analysts are worried that the change in law will undermine the national currency. It could also allow Chávez to fund the country's fiscal deficit through its reserves. Meanwhile, Brazil is poised to undertake an ambitious liability management exercise. It is rumoured to have asked CSFB and JPMorgan help rid it of its $5.6 billion of outstanding Brady C bonds. Brazil is expected to swap its 2014 C bonds for new short-dated global bonds later this year. The motive is political rather than financial as Brady bonds are associated with the Latin American debt crisis in 1980.

The article reports that Maurel & Prom, the independent oil company with assets in sub-Saharan Africa, has extended and increased its financing through Natexis Banques Populaires. The French bank has closed syndication of the $150 million deal. The transaction is structured as a reserve-based lending (RBL) deal, with funds secured by a pool of producing assets in Congo. The RBL structure sees lenders take some performance risk as finance is secured against estimated cash flow streams derived from the oil assets that are used as collateral. The firm continues to expand, with operating income for 2004 up by 324% on the previous year, and has also acquired assets in Cuba.

Discusses how SunTrust Banks Inc. officials quickly came clean after uncovering errors in loan-loss reserve calculations in October 2004. Reasons behind SunTrust's forceful approach to disclosing the errors, in light of the company's history and the strict regulatory environment; How SunTrust delayed third-quarter earnings reporting and put two executives on administrative leave; Impact of the incident on the company's stock price.

Announces that profit at Triad Guaranty Inc. in the second-quarter of 2004 jumped from previous figures. Effect of rises in paid losses and reserves because of higher claim severity; Amount of new business written by Triad; Rise in bulk transactions.