A stable, well-functioning financial market for allA stable, well-functioning financial market for allCompanies' internal capital assessment – assessing capital requirements in accordance with Basel II
Commencing 2007, the reformed Basel Rules - also called Basel II - will be applicable in Sweden and the rest of the EU. Corresponding rules will also be implemented in a number of other developed countries. These rules directly affect all credit institutions and investment firms as well as the au-thorities that engage in supervision and monitoring of financial institutions and markets. However, the institutions' customers will also be affected in very specific ways - interest rates for different types of loan and to different customers will, for example, be affected. Thus, all are affected by the new rules. This in itself represents a good reason to disseminate awareness of the new regulatory regime and its various constituent parts.
It is, however, of course of particular importance that the institutions that are to apply the new rules are acquainted with both the aims of the new rules and the manner in which they are to be administered in practice. Many parties are already well acquainted with these rules and the requirements they im-pose. But this is the case primarily with respect to the large banks – among the smaller players, the level of knowledge thus far is more variable. The new rules will impose extensive requirements not only on the large institu-tions but also on the smaller ones, at the same time as the date of entry into force of Basel II is approaching. Thus, it is important that also smaller banks and investment firms acquaint themselves with, and prepare themselves for, the new rules. A central constituent element of this, and one in which the institutions themselves will bear the responsibility, is the Internal Capital Adequacy Assessment Process - ICAAP.
The purpose of this publication is to meet part of the need for information among, primarily, the smaller institutions, but also among a wider public, with respect to the import of the Basel regime in general and of the internal capital adequacy assessment process in particular. Finansinspektionen (the Swedish Financial Supervisory Authority, FI) welcomes comments and questions concerning the material.
