Basel II securitisation paper planned for October

Global banking regulators plan to issue on October 1 a working paper on the treatment of asset securitisation in the Basel II banking Accord, one of the issues that prompted its delay until late 2006.

The working paper is one of a trio of documents that the Basel Committee on Banking Supervision, the architect of Basel II and the body that in effect regulates international banking, will issue on October 1, regulators said.

The Committee plans to issue its key third quantitative impact study (QIS3) seeking information on how banks would be affected by the complex, risk-based Accord, along with a non-technical paper explaining Basel II’s progress.

In March, the Basel Committee decided to delay Basel II’s introduction for the second time. This was mainly due to significant work still required in asset securitisation and lending to small to medium-sized enterprises.

Regulators now believe solutions to both issues will be achieved in the next few months, and that the Accord will succeed in meeting the revised timetable. QIS3, accompanied by detailed notes and explanations, should give bankers a very clear idea of the final shape of Basel II, regulators said. A third consultative paper (CP3) is targeted for May next year, with bankers given a 90-day period for comment.

Basel II in its final form should then be ready by November 2003, giving national governments three years to pass any necessary laws.

Meanwhile, the Basel Committee’s risk management group, which is meeting today and tomorrow in Luxembourg, is due to set a publication date for a survey seeking more information on operational losses from banks. The survey is expected within weeks.

The information is needed by regulators to help refine their ideas on advanced approaches to measuring operational risk.