Supplement: Capital Strategies For Banks - Basel II Brings Banking Evolution - Spiro Pappas Of ABN AMRO And Charles Lucas Of ABN AMRO Rothschild Talk To Jules Stewart About The Future Of Capital Management Post-Basel II And How Preparation For The Accord'.

Banker, The, February, 2004 by Stewart, Jules

Basel II may be just round the corner or it may be three years down the road, depending which commentators you listen to. Nevertheless, the final draft is on the table and financial institutions worldwide are being forced to think in a different way.

The third consultative paper on capital adequacy is part of the process to replace the 1988 Basel Accord, the first global attempt to set minimum levels of capital that banks need to hold. Under the new rules, the focus for determining capital adequacy will shift to a more sophisticated measurement of credit risk. It will take into account some financial disasters that have taken place since the original proposals were drawn up, such as the collapse of Long Term Capital Management (LTCM) - the world's largest hedge...

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