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Basel II Dress Rehearsal Signals Global Quest For Stable Capital Levels Achievable Sep 06
Standard & Poors, Sep 2006
Abstract
Basel II's dress rehearsal in the form of the fifth Quantitative Impact Study (QIS 5), its last and most comprehensive test run ahead of implementation, confirms that the quest by bank regulators for stable capital levels and improved risk-management practices is achievable. The overall decline in minimum capital requirements recorded in a very benign environment appears moderate indeed in Standard & Poor's Ratings Services view. We expect that banks will manage their internal capital targets with a wider buffer above regulatory minima than under Basel I to cope in particular with volatility issues. This will be even more necessary in the years immediately after implementation, as QIS 5 findings have highlighted some remaining data consistency issues that have affected quantitative...
Standard and Poors RatingsXpress Credit Research provides in-depth coverage of international corporates, financial institutions, insurance companies, utilities, sovereigns and structured finance programs. RatingsXpress Credit Research lets users determine the credit rating of holdings and identify key factors underlying an issuer's creditworthiness, distinguishes the different risk exposures for new and existing deals, and provides an understanding of how their analysts interpret key regulatory, political and environmental events and their economic impact.
Research Type: Commentary
Criteria articles describe the thought process and methodology Standard & Poor's analysts use in determining ratings. These commentary pieces discuss both the quantitative (economic and financial) and qualitative (business analysis and caliber of management) aspects of the analysis, as well as legal issues.
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