|
Banks ready for Basel II
11/06/2003 15:47 - (SA)
Johannesburg - South Africa's "big four" banks - Nedcor, ABSA, Standard Bank and FirstRand - will be ready for the implementation of the Basel II accord by the due date, which is the end of 2006, Fitch Ratings said on Wednesday.
The new accord is aimed at improving the capital adequacy framework, which applies minimum capital requirements to bank risk by seeking to create more rational and wider differentiation of types of credit risk.
In terms of the framework, banks are encouraged to place emphasis on risk management and to strengthen their risk assessment capabilities. Banks are also required to have capital cover for losses arising from operational risk.
"It is Fitch Ratings' opinion that the Big Four will be ready for the implementation of Basel II by the due date," Fitch said.
"According to the banks' management there will be business areas that will benefit from the new accord in terms of capital relief, such as mortgage, credit card and instalment finance, whereas others, such as SMME, wholesale and investment banking, might require additional capital cover because of insufficient default data.
"Although the tone of Basel II is not particularly amenable towards securitisation , the new accord is seen as an incentive to create a sound banking system and to promote transparency and investor confidence. It should also make South African banks more competitive internationally," the rating agency said.
- I-Net Bridge (Business)
|
