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Thursday, 25th April 2024 |
| Basel II deadline postponed |
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Due to several delays, the Basel Committee on Banking Supervision has postponed the date of implementation of the New Capital Accord from 2005 until 2006. Initally, the committee expected that the Accord would be finalised in 2002 but at a meeting on July 10th, revised this date until the fourth quarter of 2003. This will then allow for implementation of the new framework in each country at year-end 2006. During this three-year period banks and supervisors are expected to adapt and develop necessary systems and processes in conformance with the standards of the new Accord.
The Accord was delayed in December 2001 year when the Committee decided to undertake an additional review aimed at assessing the overall impact of a new Accord on banks and the banking system before releasing the next consultative paper which had been due in early 2002. At the time, the Committee did not expect the implementation of the Accord to be delayed, but the feeling among the banking industry is that the Accord will not now be implemented until 2007.
Further, the Committee, will also launch a Quantitative Impact Survey (QIS 3) on 1 October 2002, which will allow banks to perform a concrete and comprehensive assessment of how the Committee’s proposals will affect their particular firm. Banks will be asked to submit their findings by 20 December 2002. Assessment of the QIS 3 results will allow the Committee to determine whether any adjustments need to be made prior to the release of an updated revision of its proposals for public comment in the second quarter of 2003.
At the meeting the Committee also reached agreement on a number of other issues related to the Accord including approving the creation of a new IRB risk-weight curve that should provide a more risk-sensitive treatment of certain revolving retail exposures, including many credit card exposures. In addition, the Committee reaffirmed that there will be a Pillar One capital treatment for operational risk, but recognised the need for significant flexibility in the development of bank measurement and management systems under the advanced measurement approaches (AMA). The Committee agreed to eliminate the separate floor capital requirement that had been proposed for the AMA.
The Committee will continue to look for ways to further streamline the new capital framework where appropriate. |
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| Article appeared in the July 2002 issue.
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