The Basel Committee on Banking Supervision yesterday released detailed proposals for the reform of international capital adequacy guidelines for banks. The Committees current guidelines, set out in the 1988 Basel Capital Accord, have become the global benchmark for banks capital adequacy. In Australia, the Australian Prudential Regulation Authority (APRA) applies the framework to all authorised deposit-taking institutions (ADIs) banks, building societies and credit unions.
The Committee released its original reform proposals in June 1999, and received a large number of responses. (APRAs submission is available on our website refer www.apra.gov.au/policy.) The revised Consultative Paper, which elaborates on the original proposals, is extensive, and comprises:
· an overview paper outlines the basic structure and philosophy of the new Capital Accord;
· a rules paper sets out the mechanics of the capital calculations; and
· seven technical supporting documents provide detailed guidance to supervisors and banks for interpreting the various requirements in the rules paper.
Commenting on the release of the proposals, APRAs CEO, Graeme Thompson said:
APRA supports and welcomes the Basel Committees reforms. Though more complex than existing requirements, the proposed new rules will give depositors better protection against the risks in banking. They will also be flexible to suit institutions of varying levels of sophistication a range of capital calculation options will be available.
The Basel Committee has called for comments by 31 May and intends finalising its proposals by the end of the year. Implementation of the revised framework is envisaged in 2004 to give institutions and supervisory agencies sufficient time to prepare for the new system.
Mr Thompson said:
APRA will prepare a submission to the Basel Committee on the new reform proposals and, as input to this, will be seeking feedback from ADIs and other interested parties during the comment period.
Recognising the wide-ranging nature of the reforms, an important task for APRA will be to assess carefully the impact of the changes on Australian ADIs. As part of this assessment, we will be calling on a number of institutions to participate in an impact study that we will conduct as part of an international exercise being co-ordinated by the Basel Committee.
The Committees consultation paper is available from the BIS website (www.bis.org). For Australia, APRA is seeking submissions from interested parties by end April. Responses to the consultative document should be sent to Brian Gray, Executive General Manager (Policy, Research & Consulting) at APRA.
Enquiries:
Wayne Byres
General Manager, Risk Analysis & Research
(02) 9210 3146 or wayne.byres@apra.gov.auGo to the top of the page
