Banks Unprepared for Basel II Credit Risk Overhaul
Financial institutions are ill-prepared to deal with Basel II credit risk assessment regulations, according to a new report from Meridien Research. Most financial institutions will have difficulty complying with the new regulations due to a number of factors – primarily the availability and organization of the myriad data necessary for an internal ratings-based approach to calculating capital charges, Meridien said. In January 2001, the BIS Basel Committee released its draft capital accord, representing an initiative to revise and improve the management and reporting of capital held by financial institutions. The accord contains extensive and specific requirements regarding the collection and use of data surrounding banks’ credit assessment and management practices.