Resources for Basel II Capital Accord (Basel II)

A pricing revolution

www.mortgageintroducer.com

John Willcock looks at Basel II and the impact that the initiative will have on the mortgage industry in the UK in 2008 and beyond

Capital is a costly and limited resource for all institutions – the more capital a lender has, the more mortgage business it can write.

The new legislative framework known as the Capital Requirements Directive – commonly referred to as Basel II – governs how much capital all banks and building societies must hold to protect their members, depositors and shareholders. It was introduced by the European Union in January 2007.

In the UK this is being implemented by the Financial Services Authority. The new Basel II regime is important for lenders because it enables them to be more efficient with their capital and therefore write more business.

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