Asia must prepare for Basel IV

Author: Ashley Lee | Published: 7 Jul 2015

The Basel Committee on Banking Supervision (BCBS) has now turned its attention to how banks calculate credit risk in an initiative that’s been deemed Basel IV. The region’s banks could suffer unintended consequences.

The so-called Basel IV proposal is an attempt to standardise how institutions calculate credit risk and regulatory capital. Banks currently use different models, such as an Internal Ratings-Based Approach (IRB) or the standardised approach.

According to Moody’s, 22% of banks of the 114 it rates in Asia use an IRB, while 13% are in transition or have parallel arrangements. While that seems insignificant, that 22%...



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