When a participation is sold, the lead bank generally assumes that the amount will be removed as an asset from its books - in accounting parlance, "derecognized."

This assumption may be challenged by a recently issued promulgation of the Financial Accounting Standards Board titled "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities."

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.