Isda concerned about Basel II cross-border operation

The biggest concern arising from the Basel II capital Accord is how it will operate for banks across national borders, says Tanya Castell, London-based head of investment bank UBS Warburg’s risk policy group and the chair of the International Swaps and Derivatives Association’s (Isda’s) Basel Accord implementation group.

Speaking at an Isda conference held today to update members on its work, Castell said there needs to be consistency in the way the Accord applies so that all banks will be on a level playing field.

The Basel Committee on Banking Supervision, the body that in effect regulates international banking, wants to bring Basel II into effect for the large, international banks of the leading economies by late 2006.

The European Commission wants to apply parallel capital adequacy rules closely modelled on Basel II to all banks and investment firms in the 15-nation European Union.

Castell said the home country regulator would normally be the “lead” regulator for an international bank. Isda supports the view that a home country as lead regulator should have responsibility for the global regulation of a consolidated banking group.