Basel Still Adamant On Restructuring
Buried in a 120 page document is the latest sign that the Basel Committee on Banking Supervision is still insisting on including restructuring as a credit event for regulatory capital relief. In a document published this month, named Quantitative Impact Study 3, Technical Guidance, it states that, "restructuring of the underlying obligation involving forgiveness or postponement of principal, interest or fees that results in a credit loss event (i.e. charge-off, specific provision or other similar debit to the profit and loss account)," must be included.
Credit derivatives professionals and the International Swaps and Derivatives Association are petitioning the Basel Committee to remove restructuring as a requirement for regulatory capital relief.