Asian banks face Basel II catch-up

Author: | Published: 1 May 2005

Just under a year ago, the Basel Committee on Banking Supervision issued the final guidance on the international convergence of capital measurement and capital standards, the new capital adequacy framework commonly known as Basel II. This publication followed five years of consultation and quantitative analysis among central banks and leading banks around the world. The new Basel II accord proposes, among other things, more detailed criteria for the treatment of credit risk and, for the first time, introduces criteria for the regulatory treatment for operational risk. Beyond merely measuring the capital requirements for the risk categories, it also puts strong emphasis on criteria for supervisory review and increased public disclosure.

Although the Basel II accord is not legally binding, many countries aim to adopt the principles and criteria for their local regulatory framework to achieve sound banking systems, as well as to ensure a level playing field globally. Many regulators are also trying to...