In a recent survey by the G6 working group, Isda found that most loan houses believe they are required to include restructuring as a credit event for regulatory capital purposes. This could well be the case when the Basel II Capital Accord is implemented in 2006, since the Basel Committee is showing no signs of backing down from its requirement for banks to include restructuring as a credit event.
“To make progress on the restructuring debate, all parties have to reach a middle ground,” said Richard Williams, London-based head of asset management and risk transfer at Abbey National Treasury Services. “Restructuring is partly driven by Basel-related regulatory capital concerns but it is also a real risk transfer mechanism. The ability to trigger has to be clarified.”
Isda is holding an annual members' update meeting in London today.