The Basel Committee on Banking Supervision has revised paragraph 75 of Basel III (which is designed to ensure that an increase in the credit risk of a bank does not, via a reduction in the value of its liabilities, lead to an increase in its common equity) as regards its application to derivatives.

Having considered responses to a consultative document issued last December, the Committee has confirmed its intention to proceed with the baseline proposal included in the consultative document and has agreed that valuation adjustments to derivative liabilities arising from the bank's own credit risk should be fully derecognised from the calculation of common equity at each reporting date.