Capital Requirements: Ten Steps to Take Now for Basel Ii and Ia

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Capital Requirements: Ten Steps to Take Now for Basel Ii and Ia

Much has been written about the proposed new Basel rules for bank capital adequacy, and with good reason. When the new rules are finally adopted, they will dramatically increase the managerial challenges and competitive pressures (and opportunities) facing banking institutions and their officers and directors.1

Banks will all be affected, whether as a result of regulatory requirements or competitive pressures. The new rules will force banks to deal with compliance and risk management issues that are similar in kind and scope to those that resulted from the Sarbanes-Oxley Act.

BACKGROUND

On Sept. 25, 2006, the Federal Reserve Board released to the public a notice of proposed rulemaking (Basel II NPR) that would implement the Basel II risk-b...

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