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In accounting, "off-balance-sheet" (OBS), or incognito leverage, usually describes an asset, debt, or financing activity not on the company's balance sheet. Total return swaps are an example of an off-balance-sheet item. Some companies may have significant amounts of off-balance-sheet assets and liabilities.
Structured finance is a sector of finance — specifically financial law — that manages leverage and risk. Strategies may involve legal and corporate restructuring, off balance sheet accounting, or the use of financial instruments. Securitization provides $15.6 trillion in financing and funded more than 50% of U.S. household debt last year.
As mentioned above, off-balance sheet categories are also weighted as they contribute to both the assets and liabilities. This is best explained by the potential for contingent calls on funding liquidity (revocable and irrevocable line of credit and liquidity facilities to clients). Therefore, once the standard is in place, off-balance sheet ...
Over the past decade, ABCP programs have grown to serve a wide variety of needs such as: asset-based financing for companies that cannot access the commercial paper market, warehousing assets prior to security issuance, investing in rated securities for arbitrage profit, providing leverage to mutual funds, and off-balance sheet funding of bank ...
To deleverage, one needs to raise cash to pay debt, either from raising capital or selling assets or both. A bank, for example, can cut expenditure, sell liquid assets, absorb off-balance-sheet structured investment vehicles and conduits, or allow its illiquid assets to run off at maturity, which, however, can take a long time.
Risk-weighted asset (also referred to as RWA) is a bank's assets or off-balance-sheet exposures, weighted according to risk. [1] This sort of asset calculation is used in determining the capital requirement or Capital Adequacy Ratio (CAR) for a financial institution.