Basel II: the new accord (TT May03 p51-53)

We all know it is coming, but how will this simple formula affect the banks’ perception of corporate credit risk and, in turn, how should companies view banks? In this article, we will examine and assess some of the possible impacts the Basel II Accord (the new Accord) will have on the way companies undertake business with banks.We will also look at a number of the proposed changes to credit risk management in the areas of risk weighting, capital adequacy and credit risk mitigation (CRM).