Zurich, July 27: The Basle Committee on Banking Supervision said on Tuesday it was issuing four papers on credit risk, saying such exposures posed significant concerns for regulators and banks. The latest papers include a revision of a consultative paper first issued in October 1998, and three papers still subject to comment. The comment period for these ends on November 30.New York Federal Reserve president William McDonough, who also chairs the Basle Committee, underscored in remarks issued with a summary of the papers that guidelines on credit risk were of paramount importance.
"We know from experience that weak credit risk management practices and poor credit quality can pose a serious threat to the stability of banks and banking systems," McDonough said.
Roger Cole, an associate director at the US Federal Reserve and co-chair of the Basle Committee's risk management group, called exposure to credit risk the "leading source of problems in banks" in Group of 10 (G10) and non-G10 nations. One paperalso deals with foreign exchange settlement risk, which also has a credit risk element. The Basle Committee is headquartered at the Bank for International Settlements (BIS). The papers are available on the BIS's website (www.bis.org):
Sound practices for loan accounting and disclosure (final version) Principles for the management of credit risk Best practices for credit risk disclosure Supervisory guidance for managing settlement risk in foreign exchange transactions.The Basle Committee is made up of banking supervisory authorities established by the G10 in 1975.
It brings together representatives from Belgium, Britain, Canada, France, Germany, Italy, Japan, the Netherlands, Sweden, and the United States, as well as Switzerland and Luxembourg.
Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.
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