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Danièle Nouy |
Despite moving into the Christmas period, there is no let up in the challenges that financial institutions and banking supervisors face in implementing the New Basel Capital Accord (Basel II).
Basel II in the USA has been limited to the top 10 international banks by the US regulators with another 10 large banks being allowed to elect to adopt that approach. The final Notice of Proposed Rulemaking (NPR) legally requires allowing comment from banks before implementation and this comment period expires on January 23rd 2007. However US regulators have limited US banks outside the select group of 20 to a modified version of Basel I, called Basel 1A, and the NPR for this is not yet out. Drafting is expected to be complete by early December but the likely approval by the US’s complex arrangement of four involved regulators is expected to delay public release for at least a week or so.
There is a desire by both regulators and the banking industry to have the comment periods for the two US versions of Basel II to overlap. To achieve this, given the american holiday season, is likely to mean an extension to the comment period for the big banks, which will in turn increase the preassure on implementation dates, already 1 to 2 years behind Europe and many other banking markets.
Europe is moving on with Basel II, known in the European Union as the Capital Requirements Directive (CRD) with those adopting the simpler approaches implementing next January and the adopters of the more complex capital approaches coming in a year later. However all is still not yet resolved in the areas of interpretation within the EU member states. Last week, Ms Danièle Nouy, the chairperson of the Committee of European Banking Supervisiors (CEBS), in a presentation to the Economic and Monetary Affairs Committee of the European Parliament, admitted that the three big issues for the CEBS were divergence of national interpretations across the EU and the resulting issues of cost of different reporting regimes and complexity of cross-border supervision. Whilst assuring the committee of expected success, she did not minimise the effort and cooperation that would be needed to achieve this. Supervisory coordination will be a major CRD problem for European banks which operate in more than one state if this success is not delivered.
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