Credit card capital charges will be lower under Basel II

Major banks will probably have to set aside a lot less capital as a cushion against losses from defaulting credit-card holders under the Basel II bank accord than they in effect do now, global banking supervisors said in early July.

But protective capital against credit risk on the rest of their non-mortgage retail lending business will on average, under the Basel II internal ratings based (IRB) approach, be higher than it is now. The size of these average changes isn’t quantifiable at this stage, regulators said.

But regulators downplayed press reports that this represented a deal that favoured US banks with their large credit-card business in return for the US agreeing the settlement of the argument over the treatment

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