Basel II to be re-calibrated for Asian banks

Simon Topping, executive director for banking policy at the Hong Kong Monetary Authority (HKMA), said in July that the proposed Basel II capital accord will be re-calibrated during the current consultation period to make risk weightings for Asia's banks more capital-neutral. "[The Basel Committee] has confirmed it is not trying to make banks in Asia hold more capital. This is actually an unwelcome side effect of how we've got it calibrated at the moment," said Topping. "This is a teething problem."

Banking analysts said Topping's comments should reduce fears that Asian banks will be treated unfairly under Basel II, which will determine in the first instance how much of their assets large international banks must set aside as reserve capital to guard against banking risks.

The HKMA, which is the banking regulator in China's special administrative region, said in comments on Basel II to the Basel Committee on Banking Supervision that Hong Kong's banks would experience significant