1. BASEL’S CONSULTATION PROCESS: WHAT’S EMERGING? Stephen Bland, Financial Services Authority

2. OVERVIEW OF OVERVIEW Basel in two slides Key issues -Absolute capital -Internal ratings -Operational risk -Supervisory review -Market discipline -EU implementation -Way forward

3. CAPITALCAPITALCAPITALCAPITAL THE THREE PILLARS DISCLOSUREDISCLOSUREDISCLOSUREDISCLOSURE SUPERVISIONSUPERVISIONSUPERVISIONSUPERVISION

4. THE THREE RISKS Unchanged –Capital definition –Market risk Lots of change –Credit risk –Operational risk

5. ABSOLUTE CAPITAL Average Dispersion Volatility

6. INTERNAL RATINGS Three options Further work Consultation process

7. OPERATIONAL RISK Why capital? How much? Three approaches Further work

8. SUPERVISORY REVIEW Work for firms Work for regulators Level playing fields

9. MARKET DISCIPLINE Purpose Detail Implementation

10. EU IMPLEMENTATION EU consultation Differences of substance Differences of form UK angles

11. WAY FORWARD Timetable Further work by regulators Work for the industry