|The Swiss town
of Basel, which has given its name to two accords on
capital adequacy and so drawn the anger of banks
From January 1 2010, Basel II will be in full effect. The
new rules are scheduled to come into effect for all EU banks on
January 1 2007. One year later, additional rules for advanced
banks will come into effect, with a two-year transition period.
These rules will make highly-rated asset classes more popular,
could lead to the restructuring of many conduits and will act
as an additional capital tax on securitization.
Basel II will align bank regulatory capital requirements
with the risk of exposure, reducing the amount of regulatory
arbitrage that occurred under Basel I through transactions that
did not change a bank's risk profile but reduced its capital
requirements. Basel II will, for the first time, permit banks
to calculate required capital on the...