Top bankers concerned over U.S. Basel accord delay

By Staff
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ZURICH, Mar 30 (Reuters) Top international bankers said on Thursday that delayed implementation by U.S. banks of the Basel II bank regulatory agreement could create problems for banks operating on both sides of the Atlantic.

''It appears that the European Union and other Basel Committee member countries are on course to launch the new approach in 2008, while the United States will implement at least one year later,'' said Josef Ackermann, Chairman of Deutsche Bank, at a gathering of international bankers.

''Complex issues arise for banks that operate and that may have to work under two systems at the same time. The negative impact of a lack of coordinated timing and approach could also be considerable for banks in many other jurisdictions,'' he added.

Ackermann was speaking at a news conference at the opening of a two-day annual meeting of the Institute of International Finance (IIF), a lobby group for some 340 banks operating in 60 countries.

The Basel II accord establishes a complex set of guidelines governing credit, market and operational risk management by banks and supersedes an earlier capital adequacy accord known as Basel I which came into force in the late 1980s.

Bankers welcome Basel II, despite its complexity, because they believe it matches capital requirements more closely with the different kinds of risk that they encounter.

''Basel II means that capital required is more aligned with risk than Basel I was,'' said Cees Maas, chief financial Officer at ING Group.

Ackermann, who chairs the IIF, was optimistic that the so-called ''gap year problem'', caused by a delay of at least one year by U.S.

banks in implementing Basel II, could be resolved but did not elaborate on how a compromise might be reached.

''We remain hopeful that this issue can be resolved and we note that there is a rising recognition that the possibility of diverging versions of the Accord being implemented across jurisdictions could be disruptive to implementation plans, administratively burdensome and costly.'' Ackermann's hopes for a favourable outcome were echoed by other IIF officials.

''The gap year does pose operational problems but we are optimistic that a solution can be found to these differences in timing,'' said Charles Dallara, Managing Director of the IIF.

But Maas said European banks were keen to implement Basel II on time and there did not appear to be any sign of a delay that might allow implementation on both sides of the Atlantic to be brought into line.

''The train has left the station already a long time ago and we want to implement the accord in 2008. Don't forget that we are happy with Basel II,'' said Maas.

''The problem of the gap year is that the calibration will be different if some of the important banks are not in. We have urged Basel to come up with a calibration as quickly as possible,'' he said in a reference to the Basel Committee which meets under the auspices of the Bank for international Settlements.

REUTERS SD BD1909

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