The countdown has begun to Basel II, not only for the banks that will have to comply with the new capital adequacy framework, but also for their many thousands of corporate clients. Under the new rules the focus for determining capital adequacy will shift squarely to credit risk, taking into account the numerous and often spectacular financial disasters that have rocked the corporate world, from Enron to Parmalat, since the original proposals for Basel I were drawn up in 1988.
“Basel II is already having an impact on corporates,” says Rob Boyd, executive director financial markets advisory at ABN AMRO. “Banks have had to prepare for implementation in 2007. For them to be able to use the internal ratings-based approach, they have to have at least three years of data to support their calculations. So they need data at least from the beginning of 2004.”
