BASEL

1
BASELS CONSULTATION PROCESS WHATS EMERGING?
Stephen Bland, Financial Services Authority
2
OVERVIEW OF OVERVIEW

• Basel in two slides
• Key issues
• Absolute capital
• Internal ratings
• Operational risk
• Supervisory review
• Market discipline
• EU implementation
• Way forward

3
THE THREE PILLARS
4
THE THREE RISKS

• Unchanged
• Capital definition
• Market risk
• Lots of change
• Credit risk
• Operational risk

5
ABSOLUTE CAPITAL

• Average
• Dispersion
• Volatility

6
INTERNAL RATINGS

• Three options
• Further work
• Consultation process

7
OPERATIONAL RISK

• Why capital? How much?
• Three approaches
• Further work

8
SUPERVISORY REVIEW

• Work for firms
• Work for regulators
• Level playing fields

9
MARKET DISCIPLINE

• Purpose
• Detail
• Implementation

10
EU IMPLEMENTATION

• EU consultation
• Differences of substance
• Differences of form
• UK angles

11
WAY FORWARD

• Timetable
• Further work by regulators
• Work for the industry