Financial Regulatory Forum

Basel panel sets higher capital rules for bank trading books

By Reuters Staff
July 13, 2009

BASEL, Switzerland, July 13 (Reuters) – The Basel Committee published the final version on Monday of its new rules that will force banks to tie up more capital to offset trading book risks from the end of 2010.

The Basel Committee on Banking Supervision, made up of central banks and banking supervisors from across the world, is reforming its Basel II rules, a framework used globally by banks to calculate how much capital they should set aside.

It was widely seen as failing to ensure banks had a big enough capital buffer to withstand the credit crunch.

“The Committee is also taking measures to mitigate any excess cyclicality of the minimum capital requirement and to promote a more forward-looking approach to provisioning. It will issue a consultative proposal on this broader programme by the first quarter of 2010,” the Committee said in a statement.

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