Basel II: S&P Sees Potential Strain On Capital Mkt Growth

New Delhi, Aug 29: | Updated: Aug 30 2003, 05:30am hrs
Finding inconsistencies in Basel IIs calibration of risk, especially with respect to lenient approaches to mortgage and consumer lending, and overly severe treatment of securitised debt, Standard & Poors Ratings Services has expressed concern over the possible impact of the certain Basel II proposals on the banking community.

In its reponse to the third consultative paper of the Basel Committee on Bank Supervision, S&P has supported Basel IIs goal of better aligning bank regulatory capital with risk and strengthening risk management, disclosure and supervision in the global banking industry.

Yet, while we support Basel IIs efforts to improve banks sensitivity to risk and encourage banks to improve their risk assessment and measurement, changes in the availability of credit arising from incentives created by the accord could have far-reaching effects on bank funding and the global economy, said Barbra Ridpath, managing director of S&P Europe.