Global Risk Management Solutions

Thursday, April 12, 2007

A Discussion of Basel II Risk Management in the Wake of the China Rebar and Chia Hsin Food Collapse

When China Rebar Co. and Chia Hsin Food & Synthetic Fiber Co. filed for reorganization recently, it caused an uproar across Taiwan and did serious damage to a number creditor banks. If, in light of this affair, we reconsider the Basel II Capital Accord that will come on line this year (2007), we cannot help but feel some regret........

Wednesday, April 11, 2007

Bank Runs, Family-owned Groups and the Problem of Risk Transfer

Recently, the financial crises befalling China Rebar Co. and Chia Hsin Food & Synthetic Fiber Co., both under the Rebar Asia-Pacific Group's flag, caused a run on their fellow group member, Chinese Bank. (China Rebar and Chia Hsin are also major shareholders of Chinese Bank.) The Financial Restructuring Fund, besides taking over operation of the bank, will also need to make up the associated losses during the processes of failure resolution.

Thursday, March 15, 2007

Practices for Credit Rating Models

Banks in Taiwan, like those in many countries, are required to comply with regulations under the New Basel Capital Accord (a.k.a. Basel II). As for credit risk management under Basel II, a few advanced banks plan to adopt an internal ratings-based (IRB) approach while others will follow the standardised approach.