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Home » News » Basel Proposes Credit Ratings to Gauge Certain Credit Risk, Likely Setting Up Divergence Among Regulators
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Basel Proposes Credit Ratings to Gauge Certain Credit Risk, Likely Setting Up Divergence Among Regulators

December 18, 2015
The Basel Committee on Banking Supervision issued a revised proposed standardized approach for gauging credit risk, making adjustments suggested by industry participants. Among the revisions was the allowance for certain banks to use external credit ratings as part of determining capital requirements for credit risk. While regulators in various countries appear likely to adopt the proposed use of credit ratings, U.S. banking regulators wouldn’t be able to due to provisions in the Dodd-Frank Act. Anticipating the divergence among regulators, the BCBS noted that banks would classify exposures into three different buckets, provided that certain minimum criteria are met. U.S. banking regulators noted...
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