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Basle 2 and Basel 3
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Wa_ithaka
#11 Posted : Tuesday, September 28, 2010 1:31:10 PM
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Muganda-you've made the same pt in a long-winded way
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muganda
#12 Posted : Tuesday, September 28, 2010 1:36:30 PM
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Joined: 9/15/2006
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Wa_ithaka wrote:
Muganda-you've made the same pt in a long-winded way

Touché veteran comrade.
Aiissh, can't help it! Sometimes I think when I was born, I just started talking instead of screaming... smile

But made the point without the "BS" quip which may have been insulting. Also attached a link to counter @guru267 argument.
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Wa_ithaka
#13 Posted : Tuesday, September 28, 2010 1:44:22 PM
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Location: nbi
Muganda- you are right
guru267-pole, I should have said, tiga maheni.
The Governor of Nyeri - 2017
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Scubidu
#14 Posted : Tuesday, September 28, 2010 2:16:12 PM
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Joined: 9/4/2009
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Location: Nairobi
muganda wrote:

In assessing credit risk they come up with these risk-weightings that impair capital, which need the regulator's approval; risk-weights are applied to all borrowers based on loads of additional customer information.

Requirements of the second pillar have far reaching impact on supervision, operations, market, liquidity, counterparty aspects of banking operations.

Regulator comes in on the third pillar, necessitating an overhaul of the framework of daily/monthly/annual reporting, and holding banks legally responsible for compliance to Basel II.


Yes, let's talk about the things we know. Which banks have not complied with all the above? Or instead have the Kenya listed banks or the Top Ten banks in Kenya complied with the above fully? I'm curious to know. Cos i made the same assumption as guru267.
“We are the middle children of history man, no purpose or place. We have no great war, no great depression. Our great war is a spiritual war, our great depression is our lives!" – Tyler Durden
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Wa_ithaka
#15 Posted : Tuesday, September 28, 2010 3:14:52 PM
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Scu-the CBK's own note suggests that none has complied. That was in 2008. CBK had given all banks 2012 as the target to get onstream.
I doubt it'll happen
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muganda
#16 Posted : Tuesday, September 28, 2010 3:15:53 PM
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@Wa_ithaka, agreed again. I'm not a banker, but from my simple understanding NONE. In fact, a 2010 survey from BIS Institute points out that only 3 jurisdictions in Africa (excl SA) should be implementing 2010. You see implementation of the Basel framework is normally from a country standpoint.

Please refer to pages 5/6 of Basel Implementation Survey
1. Majority of the institutions rated the level of awareness of Basel II as medium (on scale of high, medium and low). There is therefore need to enhance Basel II awareness in institutions.

2. The key reasons for low awareness of Basel II in some institutions were cited as:
a. Lack of prerequisite human resource competences.
b. Basel II is not considered a competitive tool.
c. It is not a regulatory requirement.

7. Majority of the local institutions (76%) will be ready to implement Basel II from 2010. This is in contrast to international banks, a majority (72%) of whom have indicated that they are ready to implement Basel II.

8. Only 3 out of the 24 local institutions surveyed have set aside specific budgets for Basel II implementation. 2 other institutions are actively considering a Basel II budget, while in one other institution investments in I.T. systems and training incorporate Basel II requirements.


In 2009 Banking Supervision Annual Report, CBK assessed Kenya on the basis of compliance to 25 Basel Core Principles for effective bank supervision. They noted Kenya is compliant or largely compliant with 18 principles; improving from 16 principles in 2003. Realise though, that Basel Core Principles remain neutral regarding the implementation of Basel I or Basel II frameworks.
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StatMeister
#17 Posted : Tuesday, September 28, 2010 4:34:02 PM
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Location: La Islas Galápagos
Kenyan banks are doing 12% whereas Basel II allows them to do haircuts. In this context, they are compliant mostly by fate rather than by design.

Bank supervision is quite in place.

As for disclosure, i'll let you answer . . . how much of local bank's assets are with its directors and / or their companies / subsidiaries? Where have kenyan banks doing wealth banking invested clients monies?
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guru267
#18 Posted : Tuesday, September 28, 2010 5:15:11 PM
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@Wa_ithaka when i said kenyan banks comply fully i was talking about mostly the capital aspect which is so due to default capital regulations set by the CBK being more stringent than basle....

I'm pretty sure we both know that the one of the only realistic measure of emerging market bank strength arises from the strengh of their capital base...
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Scooby
#19 Posted : Tuesday, September 28, 2010 5:30:42 PM
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Joined: 9/2/2006
Posts: 121
@stocksguru7,

I hope you know that the perogative of whether banks are on Basel II and/or will be on Basel III will be set by CBK. Currently, I think that all banks are are still on Basel I where they are making assessments on their credit risk exposures only.

Muganda has provided a good understanding of Basel II. Let me know if you want me to exposund it further for you.

For Basel III, the key features are to increase the minimum level of Tier I capital required under Bssel (currently its 4%) and its components.

Banks are currently pre-occupied with increasing their Tier II capital in order to meet their minumum capital requirements. This would explain instances where banks would issue subordinated debt instead of shares.

@ Muganda, the core principles of bank supervisions is an internal CBK matter - regarding how they supervise the banks.

Regards
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Wa_ithaka
#20 Posted : Tuesday, September 28, 2010 5:50:09 PM
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guru267-How are they more stringent than Basel 2 when they don't take account of a bank's risks and only focus on amount of capital a bank should hold?

Kenyan banks are not Basel 2 compliant
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