[13705]
July 6, 2001
TO: INTERNATIONAL COMMITTEE No. 42-01
RE: DELAY OF BASEL COMMITTEE’S CAPITAL ADEQUACY PROPOSALS
On June 25, 2001, the Basel Committee on Banking Supervision issued a press release
stating that the Committee has decided to modify the timetable for completion and
implementation of the new Basel Accord in light of the numerous comments it has received.1
The Committee intends to release a proposal for an additional round of consultations in early
2002 (instead of July 2001) and to finalize the new accord during 2002 (rather than the beginning
of 2002). The Committee expects an implementation date of 2005 for the new accord.
As you know, in January 2001, the Basel Committee undertook a second round of
consultations on a revised capital adequacy framework for banks, banking groups, and holding
companies that are parents of banking groups.2 The Committee proposed to impose capital
requirements for operational risk for the first time and to calculate those requirements based on
operational risk of each business line, including asset management. The Institute submitted a
comment letter to the Basel Committee because of the Institute’s concern that the new Basel
Accord that would take operational risks of asset management affiliates into consideration
could have the unintended consequence of setting a capital adequacy standard for the asset
management industry and would make judgements about operational risk in asset management
without adequate analysis or consultation with securities regulators.3
In its press release, the Committee highlights several important decisions that it has
taken with respect to the proposals. The Committee states that it intends to consider the
numerous comments and suggestions it has received regarding operational risk, including the
comments of the Institute. The Committee notes that it has concluded that the regulatory
capital for operational risk as originally proposed reflects too large an allocation of regulatory
capital to risk. Accordingly, the Committee intends to reduce the capital charge for operational
risk.
1 The press release is available on http://www.bis.org/press/p010625.htm.
2 See Memorandum to International Committee No. 28-01 (Apr. 11, 2001).
3 See Memorandum to International Committee No. 37-01 (May 30, 2001) (Institute comments on Basel
Committee’s proposals).
2If you have any questions about the Basel Committee proposals, please contact me at
(202) 326-5810 or at jchoi@ici.org.
Jennifer S. Choi
Assistant Counsel