Basel bank watchdog eyes new risk charges

The world's top banking authority, the Basel Committee, is considering new capital charges that could discourage some of the risky behavior behind the current credit crunch by making it more expensive.

Many big banks have been caught out in recent months as markets froze for complex instruments like certain asset-backed securities, leaving lenders holding billions of dollars in paper of uncertain worth.

Now the Basel Committee on Banking Supervision is studying whether to levy new charges to cover risks that arise when markets freeze, making it difficult to value assets, committee member Daniel Zuberbuehler told Reuters in an interview.

"We need to discuss valuation reserves and provisions for illiquid assets and exposures," said Zuberbuehler, director of the Swiss Federal Banking Commission.
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Source: Reuters