District Circular Letters

February 2, 2001

BANKING SUPERVISONS AND REGULATION:
REQUEST FOR COMMENT
BASEL PROPOSAL TO AMEND CAPITAL
ADEQUACY FRAMEWORK

To State Member Banks, Bank
Holding Companies, U.S. Branches
and Agencies of Foreign Banks,
and Others Concerned,
in the Twelfth Federal Reserve District

Proposal to Revise the Basel Capital Accord: AD 01-5 (SUP)

The federal bank regulatory agencies will accept public comments on a major proposal by the Basel Committee on Banking Supervision to amend the 1988 international capital adequacy framework. The full document is available on the web site of the Bank for International Settlements at http://www.bis.org.

Comments are requested on the proposal by May 31, 2001.

While the 1988 Capital Accord was applied to all banks in the United States, it has not been determined how broadly the new approach will be applied, particularly given the many complex elements that may not be needed for smaller, less complex institutions. The United States banking agencies recently issued an advance notice of proposed rule making for non-complex institutions ("Simplified Capital Framework for Non-Complex Institutions," published November 3, 2000, circular letter issued November 28, 2000). Comments received on that proposal, due by February 1, 2001, will be considered in determining whether to apply the new approach to all banks.

A paper summarizing the Basel Committee's proposal as well as a list of specific questions that banks may find useful as they prepare their comments is available on the Federal Reserve Board of Governors’ web site at http://www.federalreserve.gov/boarddocs/press/boardacts/2001/.

Additional Information

For additional information about the Basel proposal to amend the capital adequacy framework, please contact our Banking Supervision and Regulation Department, at (415) 974-3177.

FEDERAL RESERVE BANK OF SAN FRANCISCO