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ARTICLE · 31 MAY 1995

Regulatory Ratios Applicable To The French Banking Sector

Arthur Andersen
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FranceLitigation, Mediation & Arbitration

REGULATORY RATIOS APPLICABLE TO THE FRENCH BANKING SECTOR

According to the provisions of the French Banking Act (dated 24th January 1984), "credit institutions shall be required, subject to conditions laid down by the "Comite de la Reglementation Bancaire", to observe management standards designed to safeguard their liquidity and solvency in relation to depositors and, more generally, third parties, and the balance of their financial structure. They must in particular observe risk-asset and risk-diversification ratios" (art.51).

Enforced by the Banking Act or by specific regulations, the main ratios applicable to French banks are the following : the French solvency ratio; the risk ratios including the risk-division, the monitoring of interbank counterparty risks and the monitoring of foreign exchange positions ratios; the liquidity ratio; and the equity and long term resources ratio.

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