Rating agency concerned that Basel II doesn’t adequately assess leverage of financial institutions
Standard & Poor’s Corp. is refining its analysis of banks’ capitalization in a move to complement Basel II’s capital adequacy ratios.
The ratings specialist said it is concerned about a lack of consistency and comparability in the Basel II ratio. Hence, S&P wants to provide a complementary and independent view of banks’ risk-adjusted capital adequacy.
Banks have developed their internal risk measurement systems to compute Basel II ratios in generally benign environments, S&P noted, but that “these systems are still not fully seasoned.”
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