BANK NEGARA MALAYSIA was reported saying that all banking institutions in the country had already started adopting the new BASEL 11 Risk Management framework since Jan 2008 and hence there was no need for a deadline extension.

BANK NEGARA was reported by THE EDGE on Jul 9, 2008 saying that all banks in Malaysia are required to compute their capital adequacy ratios (CAR) under Basel II from Jan 2008.
" .... In addition, banking institutions adopting the new capital adequacy framework from 2008 are also subject to a capital requirement for operational risk based on either the basic indicator, standardised or alternative standardised approaches .... " said the Central Bank.

An exception applies to banks that have chosen to adopt the more advanced Internal Rating Based (IRB) approach to compute capital adequacy. These banks have been given an extension until 2010.

According to the Central Bank, most banking institutions were anticipated to experience only modest increases in their regulatory capital requirements, following the adoption of the revised capital framework.

Seven banking institutions (including four locally incorporated foreign banking institutions) had been allowed to remain under the existing capital adequacy framework (Basel I) until Jan 2010, in which they would be required to comply with the IRB approach for credit risk under Basel II by the stipulated deadline.

Additionally, 10 out of 12 Islamic banks had adopted the Capital Adequacy Framework for Islamic Banks, which was the revised framework that specified the standardised approach for capital computations for Islamic banks. The two remaining Islamic banks had opted to migrate directly to the IRB approach in Jan 2010.

The Central Bank also said that the implementation of the revised capital frameworks for the banking and insurance industries would remain as its key priority this year (2008).

Banking institutions that have been granted approval to adopt the IRB approach for credit risk will be required to submit their internal models to the Central Bank for review before the models could be used to determine regulatory capital requirements.

Significant supervisory resources would be devoted to the review and validation of these models ahead of the 2010 deadline for implementation of the IRB approaches, the Central Bank said.(By KLSETRACKER.com)