Basel 2 and its likely impact on AsiaƆs banks

The author of the forthcoming ''The Bank Credit Analysis Handbook'' says Asian banks may suffer from the new Basel accord on Capital Adequacy.

In a recent article, The Economist observed that capital requirements may sound arcane and achingly dull, but are nonetheless hugely important. The magazine is undoubtedly correct on both accounts, although international bank capital regulation is arguably not as tedious nor as esoteric at it seems.

In January 2001, the Basel Committee of Banking Supervision issued its final proposed revisions to the existing capital accord of 1988. The new proposals, which substantially modify a June 1999 draft amendment that had attracted considerable controversy from a variety of quarters, are likely to be accepted without fundamental changes by the end of the year and will be implemented by 2004.

The impact of the new capital regime...

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