SME debate delays Basel II consultative paper

The Basel Committee on Banking Supervision has delayed its next consultative paper for Basel II, the new rules that will determine the amount of regulatory capital internationally active banks put aside against risk, following a meeting of the committee in Basel today.

The next consultative paper, dubbed CP3, was due for release in February or March next year. But failure to address capital requirement calibrations for small- to medium-sized enterprise (SME) loans (see RiskNews’ sister publication Risk, December 2001), among other matters, has forced an as yet unspecified delay.

The committee will now hold yet another quantitative impact study to assess the overall impact of a number of alternatives in risk-weighting calibrations, before submitting a revised consultative paper. This study was initially intended to run concurrently with a consultation period after the publication of CP3, which one banking official said would not now be published until June at the earliest.

While Basel claimed the timetable change would not be a lengthy one, and still aims to finalise a new accord by the end of next year, with implementation in 2005, it added that is was “prepared to address the consequences that this step may have for its timetable if necessary”.

The new quantitative impact study will also address flexibility and clarity concerns, and attempt to finalise minimum capital requirement calibrations that are roughly in line with current capital accord levels, and provide an incentive to banks using more sensitive internal-ratings based systems.