S&P runs rule over banks’ readiness for Basel II
(1 March 2005 – Australia/Asia) The banking systems in Australia and Singapore are best prepared to meet the Basel II capital adequacy targets in the Asia Pacific region, according to ratings agency Standard & Poor’s.
However, S&P said both systems must contend with significant challenges in meeting implementation timetables.
S&P said good progress was also occurring in Hong Kong and Japan while countries such as South Korea, China, Thailand and Malaysia were opting for a more gradual and phased implementation of Basel II.
S&P said the development of robust data and systems to help banks transition to Basel II was the major challenge for banking systems globally.
"Consistent with other regions, lower capital requirements for credit risk in some banking systems in Asia-Pacific have been offset by higher capital for operational risk," S&P criteria officer, Asia Pacific region, Terry Chan said.
"Quantitative impact study trends across Asia Pacific are similar to those of other regions, with retail mortgage banks having the potential for the greatest reduction in risk weighted assets under Basel II," he said.
According to S&P financial services credit analyst Gavin Gunning, the ratings agency believed there was not an excess of surplus capital in the Australian banking system.
"Standard & Poor’s is interested in potential new insights about a bank’s risk profile, both positive and negative, that may be gleaned from the implementation of Basel II," Gunning said.
S&P acknowledged that the effects of the requirements were less clear in other countries because of data collection difficulties, which were compounded by the aftermath of the Asian financial crisis.
S&P said good progress was also occurring in Hong Kong and Japan while countries such as South Korea, China, Thailand and Malaysia were opting for a more gradual and phased implementation of Basel II.
S&P said the development of robust data and systems to help banks transition to Basel II was the major challenge for banking systems globally.
"Consistent with other regions, lower capital requirements for credit risk in some banking systems in Asia-Pacific have been offset by higher capital for operational risk," S&P criteria officer, Asia Pacific region, Terry Chan said.
"Quantitative impact study trends across Asia Pacific are similar to those of other regions, with retail mortgage banks having the potential for the greatest reduction in risk weighted assets under Basel II," he said.
According to S&P financial services credit analyst Gavin Gunning, the ratings agency believed there was not an excess of surplus capital in the Australian banking system.
"Standard & Poor’s is interested in potential new insights about a bank’s risk profile, both positive and negative, that may be gleaned from the implementation of Basel II," Gunning said.
S&P acknowledged that the effects of the requirements were less clear in other countries because of data collection difficulties, which were compounded by the aftermath of the Asian financial crisis.
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