Waiting for BASEL II

The Basel II Capital Accord, the set of rules issued by the Bank for International Settlements (BIS) in 1999 to establish new regulations for banks world-wide, aims to encourage the development of better risk management by banks. Additionally it aims to add momentum to consolidation in the banking sector, change the shape of the credit curve through credit related differentiation in risk weightings, and strengthen incentives for banks and corporate borrowers to maintain and improve their own credit quality. Although most large Western banks regard the Basle II Capital Accord compliance targets as simply an “officialization” of their practices over the last decade, Lebanese banks are yet ill-prepared to meet them. They are not alone in their anguish, as most Asian, African and emerging market banks, as well as some smaller US and European banks, consider the forthcoming regulations to be impossible to meet, and are contemplating an increasingly uncertain