Basel II


 

Basel II stands for compound equity provisions valid in the European Union member states since 1 January 2007, and applies to all financial institutions and financial services providers. The goal of Basel II is to create stability and solvency in the financial sector.

Basel II provisions are organised into three columns, where the first column corresponds in its fundamentals to Basel I.

  • Column I

Minimum capital requirements are defined. Credit risks, market risks and operational risks must follow this definition according to a corresponding differentiated schedule of calculation.

  • Column II

Covers the regulatory auditing process. It serves the purpose both of checking a credit institution's total risk in relation to major influencing factors and also of upholding compliance with banking regulations.

  • Column III

Here, the aim of more extensive disclosure obligations is to create discipline in the market.

 

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