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CM-4.2.2

As a general rule, exposures must be reported on a gross basis (i.e. no offset). However, debit balances on accounts may be offset against credit balances on other accounts with the bank if:

(a) A legally enforceable right of set off exists in all cases (as confirmed by an independent legal opinion addressed to the bank) in respect of the recognised amounts;
(b) The debit and credit balances relate to the same customer or to customers in the same group (for a group facility, a full cross guarantee structure must also exist before debit balances on accounts may be offset against credit balances i.e. full multilateral guarantees must be in place between all the companies within the group); and
(c) The bank intends either to settle on a net basis, or to realise the debit balances and settle the credit balances simultaneously; and
(d) The transactions are subject to the regulation in respect of close-out netting under market contract whenever it is applicable (see Appendix CM-4).
Amended: January 2015
Amended: July 2011
Amended: April 2011
Amended: January 2011
October 2007