The consultative paper for the second Basel Capital Accord
could not have been less popular with banks. After the Basel
Committee on Banking Supervision issued its proposals this January,
banks figured out that their regulatory capital, the most expensive
capital of all, would increase substantially.
Consultancy PricewaterhouseCoopers estimated that the proposal, if
carried forward unchanged, would increase regulatory capital for
the banking industry by about 30% to 40% in aggregate.
A large part of this increase results from a charge of up to 30%
of a bank's gross income to account for operational risk. Following
a huge outcry from the banking community, the Basel Committee has
already committed itself to reducing this figure.
But bankers still don't sleep well over the new Basel Accord. The
problem is not only that the proposals on operational risk and
other areas could damage banks' business, or that there is so much
work left...
