Bank Risk Models to Face Further Basel Probe on Capital Concerns

Banks face further scrutiny from global regulators into their risk models amid concerns lenders are underestimating the amount of capital they need to cope with losses.

Initial studies of how lenders measure risk on assets they intend to trade as well as those they intend to hold to maturity found “substantial” differences in the amount of capital different banks hold against identical securities, the Basel Committee on Banking Supervision said in a report to finance ministers from the Group of 20 nations and central bank chiefs.