Basel II—essentials [Archived]
Produced in partnership with Morrison & Foerster
Basel II—essentials [Archived]

The following Financial Services practice note produced in partnership with Morrison & Foerster provides comprehensive and up to date legal information covering:

  • Basel II—essentials [Archived]
  • The first pillar—minimum capital
  • Tier 1 capital
  • Tier 2 capital
  • Tier 3 capital
  • Risk-weighting of assets
  • Calculating credit risk
  • Standardised approach
  • Credit risk mitigation
  • The IRB approach
  • More...

BREXIT: 11pm (GMT) on 31 December 2020 (‘IP completion day’) marked the end of the Brexit transition/implementation period entered into following the UK’s withdrawal from the EU. Following IP completion day, key transitional arrangements come to an end and significant changes begin to take effect across the UK’s legal regime. This document contains guidance on subjects impacted by these changes. Before continuing your research, see: Brexit and financial services: materials on the post-Brexit UK/EU regulatory regime.

ARCHIVED: This archived Practice Note provides a legislative history of the Basel II framework, which was subsequently succeeded by the Basel III reforms. It is not maintained and is for background information only. For further information regarding Basel III and the legislation through which the framework was implemented in the EU, see Practice Note: CRD IV—essentials.

The Basel II Framework, published in its comprehensive form in July 2006 by the Basel Committee of Banking Supervision (BCBS), provided for three regulatory 'pillars' to apply in respect of internationally active banks:

  1. first pillar—minimum capital requirements to be held by banks in respect of their credit risk, operational risk and market risk.

  2. second pillar—supervisory review process, under which banking supervisors review how well banks are assessing their capital requirements for their risks and, if required, take action if they are not satisfied with the banks’ assessments, and

  3. third pillar—market discipline, under which banks are required to

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