Our comments relate primarily to the proposals for capital to cover credit risk and we are commenting only in general terms on the proposals for capital to cover other risks.
The proposals of the Basel Committee are important for borrowers because they may affect loan margins and loan documentation. We are concerned that the existing proposals could have negative implications for both of these for certain borrowers. However, we note that the weighting given to the various risks that capital is to be set against is very uncertain and until this is determined we are unable to judge whether the proposals for capital to be set against credit risk will have a significant impact on loan margins and documentation or not. Our comments below assume that there will be some impact.