Release of Basel II asset securitisation paper delayed again

Global banking regulators have delayed the issue of their working paper on the treatment of asset securitisation under the complex Basel II bank capital Accord until late next week.

The Basel Committee on Banking Supervision, the architect of Basel II and the body that effectively regulates international banking, had hoped to issue the paper at the beginning of this month along with the Basel II third quantitative impact study, or QIS 3, and the committee’s overview of progress with the Basel II accord.

But regulators said the pressure of work involved in getting QIS 3 out to more than 200 banks based in more than 40 countries resulted in a delay to the securitisation paper. The delay was not caused by any disagreements among the technical experts drafting the paper, they claimed.

The thorny technical question of how to treat the credit risks faced by banks related to asset securitisation is the last major outstanding issue related to the much delayed, risk-based Basel II Accord. Asset securitisation occurs when banks put existing loans and credits into a pool and then issue fresh securities backed by the pool.