The Official Assura Blog
Monday, November 5, 2007
BASEL II Adopted by Federal Reserve For Financial Industry
On Thursday, November 1, the Federal Reserve in conjunction with the Office of Thrift Supervision (OTS), Federal Deposit Insurance Corporation (FDIC), and Office of the Comptroller of the Currency (OCC) adopted BASEL II for large financial institutions in the US that have international activity. This adopted framework replaces BASEL I. It should be noted, that BASEL II has implications on how risk management for larger financial institution is handled. For institutions to fit this standard they must have at least $250 billion in total assets or at least $10 billion in foreign exposure.
The benefits of BASEL II is that it is a common framework that is already implemented in Europe with a proven methodology that can be leveraged. With regards to business continuity, the big difference between BASEL II and FFIEC is that BASEL II does have a requirement for implementing cross-border communications. Cross Border Communications is simply communication procedures for financial authorities in other jurisdictions. However, many Crisis Management plans for financial institutions have these procedures already in place.
To read the final rule, go to http://www.federalreserve.gov/newsevents/press/bcreg/bcreg20071102a1.pdf
Overall, the adoption of BASEL II does not affect many of the financial institutions in the United States with regards to business continuity. For those financial institutions that do fall under BASEL II, there should be not significant impact if the program is fully compliant with the FFIEC Business Continuity requirements.
The benefits of BASEL II is that it is a common framework that is already implemented in Europe with a proven methodology that can be leveraged. With regards to business continuity, the big difference between BASEL II and FFIEC is that BASEL II does have a requirement for implementing cross-border communications. Cross Border Communications is simply communication procedures for financial authorities in other jurisdictions. However, many Crisis Management plans for financial institutions have these procedures already in place.
To read the final rule, go to http://www.federalreserve.gov/newsevents/press/bcreg/bcreg20071102a1.pdf
Overall, the adoption of BASEL II does not affect many of the financial institutions in the United States with regards to business continuity. For those financial institutions that do fall under BASEL II, there should be not significant impact if the program is fully compliant with the FFIEC Business Continuity requirements.
Labels: Banking and Finance, Regulatory