| Headline: Bankers balk at Basel II Source: Euromoney Date: August 2001 Author: Anja Helk The latest round of bank capital proposals from the Basel Committee offers few incentives to banks to introduce more sophisticated risk rating methods while rasing concerns over increases in regulatory capital.
Consultancy PricewaterhouseCoopers estimated that the proposal, if carried forward unchanged, would increase regulatory capital for the banking industry by about 30% to 40% in aggregate. A large part of this increase results from a charge of up to 30% of a bank’s gross income to account for operational risk. Following a huge outcry from the banking community, the Basel Committee has already committed itself to reducing this figure. But bankers still don’t sleep well over the new Basel Accord. The problem is not only that the proposals on operational risk and other areas could damage banks’ business, or that there is so much work left to be done that the timetable for implementing the accord had to be delayed in June for one year. | |||||||||||||||||||||||||||||||||||||||||