Pillar II problems cause tempers to fray

LONDON – Tempers are continuing to boil over proposed Pillar II regulatory implementation, both in the industry and at the UK's Financial Services Authority (FSA). One attendee at the late July Pillar II standing group meeting described the event as "something of a bun fight".

The first problem that the industry has with the regulator's proposals for Pillar II is the FSA's vision of Pillar II's capital charge being additive to Pillar I. Industry practitioners say that Pillar II – as envisioned under Basel II or under the current consultation paper from the Committee of European Banking Supervisors (CEBS) – allows for the possibility that a Pillar II assessment could result in no additional capital, or indeed could produce a smaller capital charge than under the