Form of operational risk of a bank that is also significantly active abroad. This primarily refers to political risk and transfer risk. As some major banks in the euro area generate a quarter of their income from business with the U.S., and other institutions, such as those in Spain and Portugal, traditionally have a strong presence in Latin America, this places special demands on risk management. For example, Spanish banks occasionally had to write off their entire credit exposure in Argentina during a financial crisis in that country in 2001. In order to identify country risk concentrations of German banks at an early stage and monitor them for regulatory purposes, they have to submit quarterly reports on foreign loan volumes in accordance with Section 25, Paragraph 3 of the German Banking Act (KWG). This is specified in detail in a Country Risk Regulation (LrV), which has been amended several times. – See alliances, cross-border, asset correlation, foreign loan volume, banking supervision, European, Gigabank, Herfindahl-Hirschman Index, risk, systemic, risk ranking, transfer risks. – Cf. ECB Monthly Report of August 2002, pp. 58 ff, Deutsche Bundesbank Monthly Report of June 2006, p. 43 (measurement issues), p. 53 (legal sources), BaFin Annual Report 2008, p. 111 (amendment of the Country Risk Regulation), Financial Stability Report 2011, p. 23 ff (country risk hits both sides of the bank balance sheet in view of the sovereign debt crisis in EMU), Financial Stability Report 2012, p. 18 ff (detailed account of the sovereign debt crisis; many overviews; references).
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University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
Professor Dr. Eckehard Krah, Dipl.rer.pol.
E-mail address: info@ekrah.com
https://de.wikipedia.org/wiki/Gerhard_Ernst_Merk
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https://www.gerhardmerk.de/