Basel II Implementation in the Philippines
The Bangko Sentral ng Pilipinas (BSP) has set June 2007 as the date of implementation of the revised capital adequacy framework. The latest version of the framework is very much in line with Basel II. Major changes that are expected to have significant impact on the ratios would be the addition of an operational risk capital charge and the revision of the risk weight for Philippine government foreign currency bonds (ROP) from 0% to 100%.
In a previous circular, securities booked under Available for Sale (AFS) are taken out of market risk charge and are now considered as Banking Book exposures. I'm not sure why this is the case because these positions clearly have exposure to fluctuation in rates and are revalued accordingly. Profit or loss are then recognized in equity. This actually prompts banks to book everything under AFS (especially Philippine Gov't Peso bonds which have 0% credit risk weight) to avoid market risk charges.
As with Basel II, the framework does not directly address market risks in the banking book and leaves these as Pillar II issues.
Read more about Basel II initiatives in the Philippines:
Bangko Sentral ng Pilipinas (BSP)
The Asian Banker
Tags: finance risk management capital adequacy basel ii bsp philippines
4 comments:
Hey Jayson,
reading your basel II made me remember my risk management subject in college. haha.. Anyway, I've recently graduated and would like to sit in cfa level 1 exam by next year. Do you have any advices or something?
Thanks!
A lot of people have already asked me that question. And I always say that you need to work hard to be able to make the most out of the program. It does not mean that you will pass for sure (sometimes, it's about luck) but you will learn a lot in the process if you really prepare for the exam.
My usual tips would be:
1) To read all the prescribed readings. Even if you already read the book or know the subject matter, you should remember that the subject matter and grading will depend on these materials so you have to answer according to their point of view (not your own, not what you studied in college, etc.)...
2) To practice answering multiple choice questions in an efficient manner. Practice practice practice! The more you practice and the more you get familiar with the style of questioning, you will perform better in the actual exam (to the point that it's all mechanical). I suggest you take hold of an exam simulator software from Schwesser or Stalla.
Good luck!
Thanks! I have a feeling I need to start studying now after work.
thanks! i guess i have to study now after work!
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