FSA provides overview of approach to CRD
The FSA presented an overview of the authority’s approach to the Capital Requirements Directive (CRD) at its CRD implementation conference. Hector Sants, managing director of wholesale and institutional markets, highlighted the biggest developments in the FSA’s approach to the Basel pillars.
Pillar I
Sants outlined four big developments in Pillar I, relating to low default portfolios, the calculation of loss given default, the importance of the use tests and stress calculations.
Regarding low default portfolios, the FSA believes the use of external data, such as that of rating agencies, can mitigate existing difficulties in this area. Where there is a shortage of both external and internal data, the FSA has provided some high-level principles that should inform the use of advanced
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