Off balance sheet financing techniques to reduce


Off-Balance Sheet Arrangements Although we rarely utilize off-balance sheet arrangements in our operations, we enter into operating leases in the normal course of business. The nature of these lease arrangements is discussed in Note 6 – Land, Buildings and Equipment, Net in the Consolidated Financial Statements. bear credit risk, even though the assets have been moved off balance sheet (Figure 1). Although this type of banks’ off-balance-sheet financing has not allowed credit risk to leave the banking, it has three advantages over the conventional on-balance-sheet financing from the banks’ perspective: (1) Regulatory arbitrage. Abstract- The Financial Accounting Standards Board has implemented Statement of Financial Accounting Standards (SFAS) 94, requiring consolidated financial statements for all majority-owned subsidiaries with their parent firms, in order to eliminate off balance sheet financing. The manufacturing sector of the economy is expected to be heavily affected, with highly leveraged subsidiaries causing an increase in total debt and the debt to equity ratio after consolidation. off-balance-sheet interest arbitrage will also have to consider how to measure and control basis risk (where, for example, the underlying obligations have the same maturity or interest rate roll-over periods, but the reference rates differ). Foreign exchange risk 15. Off-balance-sheet activities have a significant impact on banks foreign exchange