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European Banks Exploit a Weakness to Cut $145 Billion in Trades

  • Flawed implementation weakens leverage rule application: BIS
  • BNP Paribas, Credit Agricole among firms with big repo swings
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Some of Europe’s biggest banks may have found a perfectly legal way to exploit a weakness in one of the finance industry’s most loathed rules.

Euro-area and Swiss lenders cut their short-term borrowings by tens of billions of dollars just before the end of each quarter, improving their reported financial health, only to build them up again in the following weeks, according to the Bank for International Settlements. BNP Paribas SA, Credit Agricole SA and Societe Generale SA regularly shrink such trades, U.S. statistics show.