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09-19-2003, 09:38 AM
A new agreement is being worked on in the international banking community to increase the capital reserves of banks. There are wide disagreements between large and small banks on this issue. Most observers believe a corrective action is needed.
"The intention is that the amount of capital that a bank is required to hold should match more closely the degree of risk it takes when it lends money. At present banks must maintain a (fairly crude) minimum 8 per cent ratio of capital to assets.
Basel II is supposed to have much more finely calibrated sets of risk weights for different types of lending. Although the Basel Committee, author of the new accord, wants the overall level of capital in the world banking system to stay roughly the same as it is now, the proposed regime will create many winners and losers, as some banks are forced to increase their capital, and others are allowed to cutback."
Read article
http://www.gulf-news.com/Articles/dubai2003.asp?ArticleID=97960
"The intention is that the amount of capital that a bank is required to hold should match more closely the degree of risk it takes when it lends money. At present banks must maintain a (fairly crude) minimum 8 per cent ratio of capital to assets.
Basel II is supposed to have much more finely calibrated sets of risk weights for different types of lending. Although the Basel Committee, author of the new accord, wants the overall level of capital in the world banking system to stay roughly the same as it is now, the proposed regime will create many winners and losers, as some banks are forced to increase their capital, and others are allowed to cutback."
Read article
http://www.gulf-news.com/Articles/dubai2003.asp?ArticleID=97960