The lobbying for and against the Bank of International Settlements' proposals for reforming the Basle capital adequacy standards is getting into full swing in the run-up to the deadline for comment on March 31.
The Association of German Mortgage Banks, for instance, is asking the Basle Committee on Banking Supervision to maintain the preferential 10% risk weighting for investors who hold pfandbriefe, rather than change it to the 20% rating that top rated asset-backed securitizations will attract if the proposals are implemented as they stand.
Securitizations currently attract 100% risk weighting, meaning that banks have to set aside 8% of the value of securitized paper.
The European Union, which has enshrined the BIS ratios in law, is set to do the same when the new proposals are finalized. It too has issued a consultation paper.
The association's president Karsten von Koeller said he was concerned that the proposals had overlooked pfandbriefe. "It is astonishing that the mortgage loan is not mentioned anywhere in the E.U. consultation paper although it represents over 40% of total lending volume in Europe," he told reporters at a news conference in Brussels.
The association's Brussels representative, Wolfgang Kaelberer, added that his members were also concerned about the proposals to use external credit ratings as a way to assess the risk weighting different bonds should attract.