Compromising on Basel II

As US banking regulators debate how much of the spirit of Basel II should be applied to small and medium-sized financial institutions, the banks themselves are stuck in no-man's land. Will 'Basel 1A' bring more certainty or more argument? John Ferry reports

First Bank, with assets of around $1 billion, is a relatively small community bank based in Damariscotta, Maine. For 140 years, it has been providing finance within communities along the Maine coast. But Stephen Ward, its treasurer and chief financial officer, has concerns beyond his local community. As with risk managers all over the world, the issue of how the new Basel capital Accord will affect the bank weighs on his mind.

He knows he will eventually have to take steps to more closely align