Basel II (Regulations) and its potential effects on asset-liability management in Maltese banking : the case of Lombard Bank

Abstract

This thesis examines the impact that the new capital adequacy regime, Basel II, will have upon asset-liability management (ALM) in banking institutions. The introduction of Basel II through the EU's Capital Requirements Directive (CRD) will mark a huge step forward in developing a modem capital framework that will improve the risk sensitivity of capital standards for firms across the EU. Basel II attempts to modernise bank supervision and bring supervisory practice into line with best industry practice. Substantial benefits will ensue, most imporhmtly, a safer anel s01miler · banking system. A key aspect of the new framework is its flexibility. It provides institutions with the opportunity to adopt approaches most appropriate to their situation and to the sophistication of their risk management.