Banks in 50 countries will complete Basel II QIS 3 survey

Two hundred and sixty-five banks from nearly 50 countries have agreed to take part in the key third quantitative impact study, QIS 3, that seeks information on how the complex Basel II capital accord will affect banks, the world’s top international banking supervisor said today.

“The inclusion of banks from so many countries will ensure that the new accord’s principles can be applied well to institutions in many countries,” said William McDonough, chairman of the Basel Committee on Banking Supervision, the architect of the risk-based Basel II accord and the body that effectively regulates international banking.

QIS 3 will be sent out to the banks on October 1, and replies have to be with national banking regulators or the Basel Committee by December 20. On October 1, banks will be given the risk-weight functions and formulas they will need to apply to the data they started collecting on receipt of draft spreadsheets in July.

McDonough, who is also president of the New York Federal Reserve Bank, said the banking industry “has demonstrated tremendous support for this survey and will devote substantial resources to its completion”. He was speaking at the International Conference of Banking Supervisors in Cape Town, South Africa.

The Basel II accord will determine from late 2006 how much of their assets major banks must set aside as a cushion to absorb unexpected losses from banking risks, including credit, market and operational risks.

McDonough said that with the public release of QIS 3 instructions on October 1, the Basel Committee would provide a full picture of the proposed Basel II framework and its quantitative requirements.

The Committee also plans to issue on October 1 an overview of progress with Basel II and a working paper on the treatment of the credit risks for banks of asset securitisation.

The Basel regulators hope to issue a third consultative paper on Basel II for industry comment in the second quarter of next year, probably in May. They plan to produce a final version of the accord in the fourth quarter of 2003, allowing some three years for banks and their regulators to ready themselves for implementation in late 2006.

David Keefe

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