Basel 2

Basel II is an international agreement outlining risk and capital management requirements for banks and financial institutions. Under Basel II, these institutions are required to build capital reserves in relation to the risk of its lending and investment policies. In order to obtain business capital at the lowest possible interest rates, companies now need to pursue policies to demonstrate their financial reliability and ensure a good credit rating.

The New Basel Accord is based on three pillars:

1. Minimum capital requirements
   Basel II assesses the individual market, operational (ranging from fraud to system failure) and credit risks for a particular company. Banks may use different methodologies for calculating credit risks. The most advanced methodologies use internal rating systems which are highly risk-sensitive without raising or lowering the total requirement.

2. Control of central banks
   Central banks may impose mandatory asset coverage that exceeds the minimum requirements.

3. Discipline and market transparency
   Banks and financial institutions must publicly disclose information on their capital levels, risks and management.

To comply with Basel 2 Tagetik 3.0 delivers:

• Generate consolidated reports in line with Basel II rating requirements

• Use standard models to compile information as required in Basel II

• Fulfill public disclosure obligations (based on the 263/2006 circular)

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