Basel II regulators issue key QIS 3 survey

Global banking regulators said they launched their key survey today seeking information on how the Basel II bank capital accord, aimed at making the world’s banking system safer, would affect banks.

The Basel Committee on Banking Supervision, the architect of the Basel II accord, said the survey, known as the third Basel II quantitative impact study, or QIS 3, is focused on the proposed minimum capital requirements under so-called pillar one of Basel II’s three-pillar structure. The other two pillars cover supervision by regulators and market discipline through greater disclosure.

The Committee also issued an overview of progress with the much-delayed, risk-based Basel II accord, which it said is intended to provide some insight into the regulators’ perspective on the accord.

The international banking regulators said they planned to release in “coming weeks” a working paper on the Basel II treatment of the risks to banks of asset securitisation. The regulators had hoped to issue this paper today.

The Basel Committee said QIS 3 has three parts. One is a questionnaire in the form of an electronic workbook. Another is a set of corresponding instructions that specify how to complete the questionnaire to ensure that banks do so in a consistent manner. The third is technical guidance that sets out the proposed minimum capital requirements in detail. It comprises all aspects of the pillar one proposals of Basel II.

The Basel regulators want to apply Basel II in the first instance to the large, international banks of the leading economies from late 2006. The accord will determine how much of their assets major banks must set aside to guard against the banking risks, including credit, market and operational risks.

Basel II will replace the current, and simpler, Basel I capital accord that dates from 1988 and which has been adopted in over 100 countries.

QIS 3 and the overview paper are available on the Bank for International Settlements’ website: www.bis.org.