Basel II Accord to transform banks' credit risk processes.

PositionIT news: round-up - Brief Article

Banks that haven't started preparing to meet the requirements of the Basel II Accord, which are to be implemented in 2007, risk falling foul of increased regulation on data.

Marcel Haenen, senior consultant, business intelligence, at Cap Gemini Ernst & Young, warned delegates at a conference held by software developer Cognos that the accord would lead to "immense" changes in the industry. Any banks that weren't prepared for it would face great difficulties, he predicted.

The new rules will allow banks to plough more capital back into their businesses, as long as they can show they are using more stringent risk evaluation processes. Whereas the previous accord insisted that banks needed to reserve around 8 per cent of each asset class to stay solvent, Basel II will dictate that they must reserve between 37 cents and $42 for every $100 in business loans. The exact...

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