Fitch Ratings Publishes a Special Report on Basel IA.CHICAGO -- Fitch Ratings Fitch Ratings An international rating agency for financial institutions, insurance companies, and corporate, sovereign, and municipal debt. Fitch Ratings has headquarters in New York and London and is wholly owned by FIMALAC of Paris. has published a special report entitled 'Basel IA: A Fork in the Road' in which Fitch outlines recently proposed revisions to U.S. risk-based capital regulations. Basel IA Basel IA was proposed as an intermediate between the current Basel I accord and the Basel II accord that is being implemented. Basel IA would have been more risk sensitive than Basel I but would not be as complex as the advanced approach under Basel II. was introduced in December of 2006 as an alternative regulatory capital methodology which is simpler and less expensive than Basel II Basel II is the second of the Basel Accords, which are recommendations on banking laws and regulations issued by the Basel Committee on Banking Supervision. The purpose of Basel II is to create an international standard that banking regulators can use when creating regulations , yet more risk-sensitive than Basel I. While the largest and most internationally active institutions will be required by U.S. regulators to adopt the Advanced Internal Ratings Based approach of Basel II for credit risk assessment, there remain more than 8,000 other banks in the U.S. representing about half the country's banking assets. This report explores the analytical challenges of the various capital methodologies and which approaches are most likely to be chosen by various types of banks. While the final version of Basel IA is yet-to-be published, it is expected to be provided in advance of the U.S. version of Basel II, which is currently slated for Jan. 1, 2009. Basel IA, as proposed, modifies the Basel I method of assigning risk-weighted assets Risk-Weighted Assets In terms of the minimum amount of capital that is required within banks and other institutions, based on a percentage of the assets, weighted by risk. Notes: The idea of risk-weighted assets is a move away from having a static requirement for capital. (RWA RWA Rwanda RWA Romance Writers of America RWA Routing and Wavelength Assignment RWA Regional Water Authority RWA Risk-Weighted Assets RWA Reaction Wheel Assembly RWA Right Wing Authoritarianism (psychology) ) in several key ways, including: increasing the number of risk weight categories; introducing greater granularity into the stratification of asset classes; and expanding the role of external ratings in determining risk weights for direct exposures, collateral, guarantees and securitizations. The 'Basel IA: A Fork in the Road' report can be found on Fitch's web site at www.fitchratings.com. Fitch's rating definitions and the terms of use Terms of Use are rules set up by the owner of an intellectual property or service to govern how they may be legally used. In many cases, terms of service are used as a contractual agreement between a company and users of a service they provide. of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures Policies and Procedures are a set of documents that describe an organization's policies for operation and the procedures necessary to fulfill the policies. They are often initiated because of some external requirement, such as environmental compliance or other governmental are also available from the 'Code of Conduct' section of this site. |
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