Basel II in the U.S. - what is different?

Outside the United States, regulators generally require all banks comply with the new Basel II, but the banks have the possibility to choose between different approaches to calculating credit and operational risk. For banks in the United States, only the larger banks and more active at the international level will be in accordance with Basel II, but only to follow the advanced methods for calculating credit and operationalrisk capital requirements (IRB and AMA approaches only).

In the U.S. there are 4 sites involved implementation of Basel II and interpretations: the Office of the Comptroller of the Currency (OCC), the Board of Governors of the Federal Reserve System (Board), the Federal Deposit Insurance Corporation (FDIC) and Office of Thrift Supervision (OTS).

These four agencies, banks have identified three groups (this is unique in the UKStates, there is a grouping of Basel II in the document):

1. Core Banks (the term "banks" includes banks, savings banks and BHC - Bank holding company).

These are large, internationally active banks. You are required to take only the advanced approaches. These advanced approaches offer greater incentives for banks to improve their risk management practices.

Core banks must meet one of two independent threshold criteria:

A.250 billion U.S. dollars or more of consolidated total assets. B. 10000000000 USD or more in total shown in the balance sheet foreign exposure.

2. OPT-IN BANKS

These are the banks that voluntarily adopt the advanced approaches.

3. General Banks

The other banks that are not the advanced approaches

Foreign banks (banks outside the U.S.) with U.S. subsidiaries

A subsidiary of a foreign bank is subject to capital requirements of the U.S. regulatorylocated in the U.S. National Dis. If a subsidiary of a foreign bank in the United States meets all the criteria of threshold, which is a central bank and is subject to the advanced approaches.

If a bank branch in the U.S. do not meet all the criteria for an emerging foreign policy, US-A bank is a general (unless it decides to opt approaches in full).

Conclusion

There are many important differences for the implementation of Basel II frameworkUnited States and other countries in the world.

Basel II, the United States apply only to a limited number of institutions.

There is much debate on the need to:

A. internationally active institutions for:

1. Take a more risk-sensitive advanced the most important part of their portfolio.
2. Have the possibility of the simplest approaches for a small part of their portfolios to achieve.

B. Banks Other:

1.Introduction of the standardized approach.
2. Avoid competitive disadvantage with Basel I and Basel II banks.