The Bank for International Settlements BIS may change the way banks assess the riskiness of their loans and how much capital needs to be allocatedáagainst them. At the FinanceAsia Asian Debt Conference yesterday, Deborah Schuler of Moody's confirmed that the BIS was yet to make a decision on this point but was considering using credit ratings such as its own as the basis for the new system.
Currently, a rigid system exists for allocating capital against a loan depending on the geographical location of the loan, and the type of entity the loan is made to. This has never been considered very satisfactory by banks. A system based on the credit ratings of...
